Dollar edges higher ahead of key U.S. payrolls release

The U.S. dollar traded higher Friday, on course for another positive week, ahead of the release of the monthly U.S. nonfarm payrolls which could influence Federal Reserve thinking.

At 03:40 ET (07:40 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher at 106.279, below the 11-month high of 107.34 seen earlier in the week, but still on track for 12 straight weeks of gains.

September jobs data due
The September employment report is due later in the session, and is expected to show that 170,000 jobs were created in the month, down slightly from the prior month.

The unemployment rate comes out at the same time, and is expected to tick lower to 3.7% from 3.8% in August.

It’s been a mixed week for labor market data, starting out with higher than expected job openings as of the end of August, then lower than expected private payroll numbers from ADP. Thursday’s unemployment claims ticked up from the prior week but were slightly below expectations.

That said, the data has generally been pretty resilient, reinforcing the Fed’s rhetoric of higher-for-longer rates, causing U.S. Treasury yields to soar and thus supporting the dollar.

“Market pricing remains well below the FOMC dot plot expectations,” said analysts at ING, in a note. “Ultimately, there is still room for a hawkish repricing at the front end of the USD curve, and the dollar’s upside risks remain substantial.”

Euro edges higher after German factory orders rise
EUR/USD rose 0.1% to 1.0535, remaining above this week’s fresh low of 1.0448, but the euro remains on course for a record losing run of 12 successive weeks against the dollar.

The single currency was helped by the news that German industrial orders rose more than expected in August, climbing by 3.9%, a significant improvement from the revised July drop of 11.3%.

“EUR/USD has rebounded from the 1.0450 lows but may lack enough buyers above the 1.0530/1.0550 area,” added ING. “The dollar remains an expensive sell, and there simply isn’t a compelling story in the eurozone to counter the U.S. exceptionalism narrative.”

Yen gains but remains below 150
USD/JPY climbed 0.2% to 148.86, remaining below the 150 level seen earlier this week which prompted speculation that Japanese authorities could have intervened in the currency market to shore up the battered yen.

Elsewhere, GBP/USD edged higher to 1.2193, with U.K. house prices falling 0.4% on the month in September, according to data from Halifax, an improvement from the fall of 1.8% the prior month.