The dollar held largely steady against the euro and yen on Friday but remained on track for a weekly gain against major peers, as uncertainty over an Iran peace deal lifted its safe-haven appeal. Traders are now waiting on the U.S. payrolls report for clues on the Federal Reserve's next move.
EUR/USD traded flat on Friday, with the dollar steady at $1.1518 against the euro, leaving the greenback on course for a weekly gain against major peers heading into the closely watched U.S. jobs report. The dollar index, which tracks the currency against six major peers, edged up to 99.975, up 0.17% for the week, after a 1.6% plunge the previous week.
Payrolls report looms over the dollar
U.S. nonfarm payrolls are forecast to have risen by 80,000 last month after an increase of 57,000 in June, according to a Reuters survey of economists, while the unemployment rate is expected to hold steady at 4.2%. The report could also offer clues on the Fed's rate path, as markets weigh the chance of a potential interest rate hike.
Nick Rees, head of macro research at Monex Europe, said: "It is all about payrolls today." He added that the dollar could see a modest sell-off if the report comes in softer than expected.
Yen and sterling hold steady too
The greenback traded little changed at 158.43 yen, after gaining 0.4% on Thursday. That kept the dollar-yen pair on course to rise around 0.5% this week, as it recovered from a bout of joint Japan-U.S. intervention that had sent it tumbling from near a four-decade high above 163 to a 13-week low of 155.20 on Monday. Against sterling, the U.S. unit was virtually flat at $1.3444.
Iran uncertainty and rate bets add support
Tensions in the Gulf are also propping up the dollar. Reuters reported a proposed deal between Iran and Oman that could give Tehran control over inbound traffic through the Strait of Hormuz, though the U.S. did not immediately comment. President Trump has said a deal to reopen the strait was imminent, but U.S. officials have repeatedly insisted they would never agree to Iranian control of the route.
Kristina Clifton, an economist at Commonwealth Bank of Australia, said the dollar was supported by higher oil prices following news that a deal between the U.S. and Iran to reopen the strait is further away than hoped. She and other analysts also pointed to a Financial Times report, citing sources close to Fed Chair Kevin Warsh, on the potential for a September rate hike depending on incoming data, though Clifton added that her bank still expects the Fed to wait until December before starting a modest tightening cycle. A divided Fed left rates unchanged last month, but Warsh said he remained committed to bringing inflation down.
Source: Reuters via Investing.com
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