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On October 4, 2024, the U.S. dollar remained near a six-week high, poised for its largest weekly gain since April, driven by safe-haven demand amid escalating tensions in the Middle East. The dollar index, which measures the U.S. currency against six other major currencies, was last recorded at 101.92, close to the six-week peak of 102.09 reached the previous day. For the week, the index has increased by 1.5%.
Market activity is expected to be subdued as investors await the U.S. non-farm payroll figures due later in the day, which are anticipated to influence the Federal Reserve’s stance on interest rates. Recent data revealed a slight rise in new unemployment benefits filings, indicating a steady labor market as the third quarter concludes. Economists surveyed by Reuters predict that 140,000 jobs will be added in the payroll report, with expectations that the unemployment rate will hold steady at 4.2%.
The euro held steady at $1.1034 after dropping 1.18% this week, while the British pound experienced losses following dovish statements from Bank of England Governor Andrew Bailey. The pound was last priced at $1.3131, near its three-week low of $1.3093 hit earlier.
As markets grapple with a strengthening U.S. economy and a more hawkish perspective from Fed Chair Jerome Powell—who recently tempered expectations for significant interest rate cuts next month—current market assessments indicate a 33% probability of a 50 basis point rate cut by the Fed in November, down from 49% last week.
Investor sentiment this week has been heavily influenced by rising tensions in the Middle East, contributing to climbing oil prices and a decline in risk-sensitive currencies. The Australian dollar was up 0.14% to $0.6850 in early trading but has seen an overall decline of 0.8% this week, marking its first weekly drop in four weeks.
For further details on this developing story, you can find additional information and quotes from experts at Reuters and CNBC.
Sources:
[1] https://www.cnbc.com/2024/10/04/dollar-poised-for-largest-weekly-gain-since-april-jobs-report-in-focus.html
[2] https://www.zawya.com/en/markets/currencies/dollar-jumps-to-seven-week-high-on-strong-us-jobs-report-i10guiw8
[3] https://tradingeconomics.com/united-states/currency
[4] https://www.thestar.com.my/business/business-news/2024/10/04/dollar-poised-for-largest-weekly-gain-since-april-jobs-report-in-focus
[5] https://www.xm.com/au/research/markets/allNews/reuters/dollar-poised-for-largest-weekly-gain-since-april-jobs-report-in-focus-53938896
[6] https://www.zawya.com/en/markets/currencies/dollar-pauses-near-six-week-high-ahead-of-us-jobs-data-sterling-attempts-recovery-ksdonx1g
[7] https://economictimes.com/markets/forex/rupee-faces-worst-weekly-drop-since-may-ends-at-83-97-per-dollar/articleshow/113945476.cms
[8] https://www.reuters.com/markets/currencies/dollar-firm-war-widens-middle-east-2024-10-02/
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