Peter Nurse

Investing.com: The dollar edged up Friday in anticipation of the U.S. monthly jobs report. This is a highly anticipated release that will confirm the Federal Reserve’s November assumption of normalizing monetary policy.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 94.305, only marginally below last week’s 94.504 peak, its highest level since September 2020.

A 0.3% increase to 111.89 was close to the 1-month peak. The risk sensitive dropped 0.2% to 0.7299. 

At its most recent meeting, the Federal Reserve stated that they are likely to reduce monthly bond purchases starting in November. This will be followed possibly by an increase in interest rates next year.

Nonfarm payrolls are expected to rise by 500,000 in September, a sharp improvement from August’s 235,000 increase.

There could still be more job opportunities, particularly after the private payrolls processor revealed that 568,000 private sector jobs were created in September. This is well above expectations. Last week’s  also suggested the labor market was recovering from a soft patch triggered by Delta-variant Covid-19. The initial claims dropped more than was expected, to 326,000. However this is before September’s cut-off.

“This month’s U.S. jobs report will likely only have to clear the lowest of hurdles to keep the Fed on track; indeed, some analysts are suggesting that as long as [the] U.S. economy creates at least 100K net new jobs, the Fed will feel comfortable announcing its tapering plan,” said Matthew Weller, Global Head of Market Research at GAIN Capital.

The news that the U.S. Senate voted to temporarily raise the debt ceiling late Thursday, putting a slight dent in the safe-haven dollar, was a positive sign. It prevents a catastrophe debt default at the very least.

Elsewhere, rose 0.1% to 6.4493 after China’s services sector made a return to growth in September, with the coming in at 53.4 in September. The widespread Covid-19 lockdowns had caused it to drop to 46.7 by August. Without triggering volatility, the People’s Bank of China could drain liquidity from its system following the Golden Week holiday.

rose 0.3% to 75.014 after India’s central bank kept its key interest rate unchanged at a record low for an eighth straight meeting, attempting to support the country’s nascent recovery from the damage caused by the pandemic.

The euro gained 0.4% in Europe against the Polish Zloty. This was after the Polish Constitutional Court’s ruling which challenged EU law’s primacy. This ruling will not only make it more difficult for the EU, but also all transfers made under its EU budget, to pay out funds for post-pandemic recovery.