Dollar falls ahead of key jobs report By Investing.com

The U.S. dollar fell modestly but remained near a near two-week high as investors turned their attention to the upcoming U.S. jobs report expected at the end of the week.

At 18:40 EST (22:40 GMT), it was down 0.1% at 101.64. It changed little at 1.1070.

The report, due out on Friday, is expected to play a crucial role in shaping the Federal Reserve’s monetary policy, especially after Fed Chairman Jerome Powell signaled a shift from a focus on inflation to preventing job losses .

There is currently a 33% chance of a 50 basis point cut this month, with a quarter point cut fully expected. This is a slight change from the previous week, when the probability of a bigger discount was 36%.

Markets had been anticipating a rate cut by the Federal Reserve, with a 25 basis point cut already factored into expectations for several weeks. The dollar’s strength previously reflected that sentiment as it hit its highest level since Aug. 20, propelled by a rise in long-term Treasury yields to their highest level since mid-August.

That rise in yields followed inflation data that suggested the Fed might opt ​​for a smaller rate cut.

The resilience of the US economy is further underscored by recent gross domestic product numbers, which suggest the Federal Reserve has room to moderate its policy easing. Despite this, traders are still betting on the likelihood of a rate cut from the Fed.

The outcome of the upcoming jobs report will likely have a significant impact on the dollar’s near-term trajectory.

“A stronger-than-expected payrolls number and a lower unemployment rate would likely give markets more confidence that upside risks have abated, paving the way for equity valuations to remain elevated and a potential recovery in other lagging markets/stocks. ,” Morgan Stanley economists said in a note.