The dollar was relatively volatile on Friday after the latest US labour market report failed to provide a clear signal on the Federal Reserve’s next policy step.
However, the greenback remains on track to finish the week higher, supported by reduced expectations of a December rate cut, now priced at roughly 33%.
The nonfarm payrolls report added to the uncertainty. Job creation surprised to the upside in September, but the unemployment rate rose to 4.4%, the highest in four years. Investors are left with a data mix that complicates the Fed’s assessment of labour momentum versus inflation risks, painting a clouded outlook for the greenback.
Comments from Fed officials could support the dollar and yields as they stressed the need for caution, highlighting persistent inflation risks.
Looking ahead, attention shifts to next week’s ADP Employment Change Weekly and the PPI report, both of which could fuel volatility for the dollar and yields, offering new clues about the direction of monetary policy.
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