The Dollar stabilised on Friday as investors awaited the US jobs report, which may indicate the economy's strength ahead of the Federal Reserve's upcoming monetary policy meeting and the closely contested presidential election next week.
In October, the Dollar achieved its strongest monthly performance in over two years, driven by a decrease in investor expectations for significant rate cuts from the Federal Reserve.
As the week comes to a close, US nonfarm payrolls data is set to be released, with economists surveyed by Reuters predicting an addition of 113,000 jobs in October.
However, analysts caution that recent hurricanes may impact this figure.
Sean Callow, a senior FX analyst at InTouch Capital Markets, noted that while the headline numbers might fall short of expectations, any significant market reaction is likely to be minimal.
Analysts indicated that the unemployment rate, anticipated to be 4.1%, is expected to provide a clearer picture of the overall health of the labour market.
“So long as it remains below 4.3%, pricing for the Fed funds rate shouldn't change much from (a 25-basis point cut) next week and likely another 25bp in Dec,” Callow said.
The Dollar index, measuring the greenback against six peers, rose 0.2% at the time of writing to 104.08. Last month the index increased 3.1%, the highest since September 2022, Reuters reports.
“I see the Dollar supported over the coming weeks, even though we’ve got a rate cut next week. But that's priced in, so it would take a serious deterioration in economic data to see expectations of a December rate cut get fully priced in and the US Dollar fall lower,” stated City Index strategist, Fiona Cincotta.
Elsewhere, the Euro was trading just below a two-week high against the Dollar on Friday, boosted this week by data revealing that eurozone inflation rose more than anticipated in October, alongside signs of growth in the German economy.
At the time of writing the single currency was down 0.17% at $1.0864.
Meanwhile, the British Pound remained steady at $1.2907 but was on track for a fifth consecutive week of losses against the Dollar.
This marks the longest losing streak since late 2018, following Wednesday's release of the UK government’s latest budget, which sparked concerns over how high taxes, elevated spending, and increased borrowing might affect growth and inflation.