As investors focused on a key US jobs report on Friday, and the prospect of the Fed keeping interest rates higher for longer, the Dollar held within tight ranges.

The non-farm payrolls report is due out later in the day, and 225,000 jobs are forecast to have been added to the US economy.

This follows on from Thursday’s data which revealed US private payrolls soared in June, whilst the number of new unemployment benefit claims enjoyed a moderate rise last week.

US Treasury yields remained high as bets increased of the Fed having to increase rates further to curb inflation. However, the Dollar was trading in a narrow range ahead of the payrolls data, Reuters reports.

Against the greenback, the Euro edged up 0.02% to $1.0894, whilst Sterling rose 0.06% to $1.2748, after hitting a fortnight-high on Thursday on bets the Bank of England would hike rates to 6.5% in early 2024, a rise from a previous forecast peak of 6.25%.

“The strong (US) data boosted market expectations for a second FOMC rate hike, which previously wasn't considered as possible,” said Commonwealth Bank of Australia currency strategist, Carol Kong in reference to a further Fed rate hike.

“Those data points suggest tonight's payrolls and perhaps the average earnings data (could) beat the consensus estimate again, and if we do get another strong result, that could firm the Dollar further.”

The Dollar index held steady at 103.04, whilst US Treasury yields remained near recent highs.

Indeed, the two-year Treasury yield rose close to 5%, having reached a 16-year top of 5.12% on Thursday. Whereas the benchmark 10-year yield stood at 4.0336%, not too far away from the session’s four-month high of 4.0830%.

“The bond market, at least, is still concerned about the impact of restrictive monetary policy in the US on the economy, and in fact, we still expect the US economy to enter a recession later this year,” Kong added.