FX.co ★ Dollar Holds Firm Ahead of Key Jobs Report

The dollar index was little changed around 99.95 on Friday, stabilizing after Thursday’s rebound, as investors cautiously awaited the closely watched July jobs report for fresh insight into labor market conditions and the Federal Reserve’s policy outlook. Fed officials have increasingly signaled they are prepared to raise interest rates soon in response to mounting inflationary pressures, with markets currently pricing in a 25-basis-point hike in September.

The Financial Times reported that Chair Kevin Warsh would be willing to raise rates as early as next month if upcoming inflation data remain elevated. He is also expected to maintain his pared-back communication style, despite criticism from financial markets.

At the same time, the dollar received additional support from a rebound in oil prices, as renewed tensions in the Strait of Hormuz rekindled concerns about inflation and the future path of interest rates.