US Dollar unchanged near 97.20, NFP eyed

The greenback, in terms of the US Dollar Index, is trading around yesterday’s close, managing to keep business above the 97.00 handle for the time being.

US Dollar attention to payrolls

The index has been trading in an erratic fashion so far this week, eroding part of last week’s advance although still navigating close to the area of multi-month lows.

Auspicious readings from May’s ISM manufacturing (54.9) and ADP above expectations during the same period (253K) allow some optimism ahead of the release of the non-farm payrolls later in the session. Market consensus expects the economy to have added 185K jobs, while the jobless rate is seen at 4.4%. Inflation pressures via wages will also be in centre stage, with average hourly earnings seen rising at a monthly 0.2%.

In the meantime, bets on a rate hike by the Federal Reserve later in the month continue to add resilience to the buck, keeping further selling interest at bay for now. In this regard, CME Group’s FedWatch tool sees the probability of further tightening this month at above 95% from yesterday’s 90% and 67.6% from a month ago.

Yields in the US money markets still appear soft despite the prospects of higher rates in the next days, with the 10-year benchmark briefly testing  weekly lows in sub-2.20% levels on Wednesday, albeit gaining some traction afterwards.

US Dollar relevant levels

The index is up 0.01% at 97.17 and a breakout of 97.42 (high may 31) would open the door to 97.70 (high May 30) and then 97.87 (20-day sma). On the downside, the next support is located at 96.85 (low Jun.1) seconded by 96.80 (low May 31) and finally 96.70 (2017 low May 23).