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US dollar supported as payrolls risk looms this week

OCBC expects nonfarm payrolls to be a key event, with Bloomberg consensus at 90,000 for September, down from 162,000 in August, while the unemployment rate is forecast to hold at 4.1%.

Reported · Written up by our desk · Major Pairs

OCBC analysts Sim Moh Siong and Christopher Wong said resilient US data, elevated Treasury yields, and higher oil prices are supporting the US dollar.

They pointed to this week’s US labour market report as the main event risk, saying a possible upside surprise in payrolls could reinforce expectations for further Fed tightening.

In line with Bloomberg consensus, nonfarm payrolls are expected to rise by 90,000 in September, compared with 162,000 in August, while the unemployment rate is forecast to remain unchanged at 4.1%.

OCBC also noted that markets are currently pricing almost four Fed rate hikes over the next year, and said their dollar view is tempered by gradual CNY appreciation.

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