The U.S. dollar is gaining strength as market participants shift their attention to the upcoming release of the Nonfarm Payroll (NFP) data, which is anticipated to provide hints about the Federal Reserve’s potential monetary decisions.
Expectations of a significant drop to 113,000 have raised questions about the resilience of the U.S. labor market. While a strong ADP report was released, a steep decline in NFP could contribute to dovish sentiment and weigh on the dollar.
Conversely, a stronger-than-expected job report could continue to support a bullish outlook for the greenback moving forward.
Wage data will also play a critical role in the dollar’s trajectory, especially given the inflation pressures indicated by rising Consumer Expenditure Prices.
These pressures support a less dovish stance from the Fed, favoring the greenback. Moreover, the ISM Manufacturing PMI data could also contribute to the currency’s volatility. Although minor improvements are anticipated, the sector is expected to remain in contraction, raising concerns about economic growth. The upcoming U.S. elections also add another layer of uncertainty.
