- The US Dollar Index is steady as key economic data approaches.
- Traders are anticipating ADP employment figures, weekly unemployment claims, and the ISM services PMI on Thursday.
- The CME FedWatch tool indicates a near certainty regarding the September 25 tax rate baseline.
The US Dollar Index (DXY), which tracks the dollar’s performance against six key currencies, saw a decline in the previous trading session but remained stable around 98.20 during Thursday morning in Asia.
Market participants are keenly awaiting new labor market statistics that might influence interest rate expectations. The ADP employment report is expected to indicate a slowdown in job growth, with a slight uptick in weekly unemployment. Attention is also on the ISM Services Purchase Manager Index (PMI).
Looking ahead to Friday, data released could play a significant role in shaping the US Federal Reserve’s policy decisions this September. Economists predict that non-farm payroll will add about 75,000 jobs in August, despite an unemployment rate holding at 4.3%.
The USD could face challenges as disappointing job openings data from July heightens the perceived likelihood of a Federal Reserve action in September. Job openings dropped from 7.35 million to 7.18 million, marking the lowest since September 2024, falling short of expectations of 7.4 million. The CME FedWatch tool now places the odds above 99% for a standard rate drop during the Fed’s September meeting, a shift from 92% just a day earlier.
On another note, Minneapolis Federal Reserve President Neil Kashkari issued a policy warning recently, citing that tariffs are contributing to rising consumer prices and inflation. He expressed concerns about the economy facing a “soft landing” scenario.
Similarly, Atlanta Federal Reserve President Rafael Bostic acknowledged that high inflation poses a significant risk for the Fed, although signs of weakening in the labor market suggest a potential rate cut later this year.
In appointments, Stephen Milan, nominated by President Trump to the US Council of Economic Advisors (CEA), emphasized his commitment to supporting the Fed’s independence. He stated that his perspectives are informed by his analysis, referencing past publications that have raised eyebrows.
