By Frank Walbaum, Market Analyst at Naga
The US dollar held steady on Friday, hovering near two-week highs and on track to close the week in positive territory. The currency strengthened in recent sessions, supported by the nomination of Kevin Warsh as the next Federal Reserve chair, a series of upside surprises in manufacturing and services PMIs, and cautious rhetoric from some Fed officials.
However, the supportive backdrop has been challenged by a deterioration in labor market indicators. Initial jobless claims rose last week, overshooting expectations, while continuing claims also moved higher. JOLTs job openings fell to their lowest level since 2020, and announced layoffs surged. The data points to a potentially weaker job market and tilts monetary policy expectations to the softer side slightly, weighing on the dollar to a certain extent.
Looking ahead, attention turns to the preliminary University of Michigan consumer sentiment reading later today, while next week’s nonfarm payrolls report is likely to be a key catalyst for both yields and the dollar.