Dollar Holds at 99.95 Ahead of NFP
The dollar index hovered near the 99.95 level during Friday's trading (Aug 7), following a 0.31% rise to 99.97 in the previous session. Investors are exercising caution ahead of the U.S. employment report for July, which will serve as a key indicator of economic strength and the Federal Reserve's policy direction.
The market anticipates an increase of approximately 80,000 jobs in Nonfarm Payrolls (NFP), following a rise of just 57,000 in June, while the unemployment rate is expected to remain steady at 4.2%. Data exceeding expectations could reinforce the view that the Fed still has room to raise interest rates, whereas weak figures could weigh on the dollar and reduce the likelihood of policy tightening.
Hawkish sentiment has also intensified following reports that Fed Chair Kevin Warsh is open to a potential rate hike at the September meeting should inflation remain elevated. The probability of a 25-basis-point hike in September has risen to approximately 56.7%, though the decision hinges on upcoming inflation and labor market data. Kevin Warsh has officially served as Fed Chair since May 22, 2026.
The dollar has also found support from rising oil prices amid uncertainty regarding the reopening of the Strait of Hormuz. Brent crude climbed back above US$83 per barrel as Iran reportedly seeks to restrict U.S. and Israeli vessels. Rising energy costs could sustain inflationary pressure and prompt the Fed to maintain high interest rates for longer.
Market Impact
A strong NFP report—accompanied by robust wage growth and stable unemployment—could push the dollar index back above the 100 mark while putting downward pressure on gold and other major currencies. Conversely, a weak NFP report could dampen expectations for a rate hike and pave the way for a renewed decline in the dollar. However, tensions in the Strait of Hormuz and rising oil prices may limit downward pressure on the dollar by keeping inflation concerns elevated. (gn)
Source: Newsmaker.id
