Dollar Steady, Eyes on Jobs and Elections

November 1, 2024

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Key points:

• The dollar index (DXY) rose slightly to 103.91 as traders focus on upcoming US jobs data and Fed policy expectations.
• The yen held firm after the Bank of Japan’s slightly less dovish stance, with the dollar-yen pair steady at 152.02.

The dollar stabilised on Friday, maintaining strength against major currencies as traders await the US nonfarm payrolls report. Expected to add 113,000 jobs in October, the jobs data could reflect economic resilience but may be complicated by recent hurricanes. 

See: The 4-hour USDX chart shows a minor 0.07% uptrend, closing at 103.850 with momentum fading near the 104.495 high as seen on the VT Markets app.

Market participants are closely watching this report to gauge the labour market’s health ahead of the Federal Reserve’s policy meeting next week. The unemployment rate, projected at 4.1%, may offer a clearer insight into the labour market’s performance, potentially challenging expectations for a rate cut by the Fed.

See also: Gold Steadies Pending Key U.S. Jobs Report

Yen Strengthens as BOJ Signals Cautious Stance on Future Rate Hikes

In Japan, the yen retained its recent gains as the Bank of Japan (BOJ) signalled a slightly more cautious stance. The BOJ’s shift could suggest room for future rate hikes, potentially as early as January, if inflation and dollar-yen trends align favourably. Currently, the dollar-yen exchange rate holds around 152.02, as traders digest the BOJ’s new tone.

Meanwhile, the euro hovered near a two-week high against the dollar, supported by data showing unexpected inflation acceleration in the eurozone. However, the euro eased slightly to $1.0882. In contrast, the pound continued to struggle, down to $1.2891, as traders react to new tax hikes introduced by UK finance minister Rachel Reeves.

US Election Outcome Looms as Potential Driver of Dollar Volatility

Looking ahead, the outcome of the US presidential election next Tuesday could drive dollar volatility. With Republican candidate Donald Trump and Democratic Vice President Kamala Harris close in the polls, market participants are weighing how each candidate’s policies might impact the dollar.

Trump’s stance on tax cuts, deregulation, and tariffs could push inflation higher, potentially slowing the Fed’s pace on policy easing.

In digital assets, bitcoin held at $70,132, reflecting stable interest amid the uncertainty surrounding traditional markets.

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