The US non-farm payroll is approaching, and the US dollar index remains volatile at a low level

The US dollar index (DXY) stabilised at the 98.20 level in Asian trading on Thursday, having eased slightly in the previous session, as traders awaited key US economic data including changes in ADP employment, initial jobless claims and the ISM purchasing managers' index for services.

The data will provide new clues about the Fed's policy path in September. Recently, JOLTS job openings in the United States fell to 7.18 million in July, the lowest level since September 2024 and well below the 7.40 million expected by the market.

The data added to concerns about a weak labour market, with the CME FedWatch tool showing a more than 99 per cent chance of the Fed cutting rates by 25 basis points at its September meeting, up from 92 per cent the day before.

Market focus is shifting to Friday's non-farm payrolls report. Economists expect non-farm payrolls to add 75,000 jobs in August, and the unemployment rate is expected to rise to 4.3%. A weaker-than-expected result could further weaken the dollar and strengthen expectations of a Federal Reserve interest rate cut.

"Tariffs are driving up the cost of consumer goods, creating new inflationary pressures," warned Kashkari, the Minneapolis Fed president. "High inflation remains the main risk, but signs of labour market weakness still point to only one small rate cut this year," said Bostic, the Atlanta Fed president.

In addition, Stephen Miran, Trump's nominee for the Federal Reserve Board of Governors, stressed that if confirmed by Congress, he would maintain the independence of the Federal Reserve and make policy judgments based on his own analysis.

From the daily chart, the dollar index showed some support near the 98.00 mark, but the overall trend is still weak. After a recent series of pullbacks, the K-line pattern is in the volatile downward channel, the short-term moving average is significantly suppressed, and the RSI indicator hovers in the neutral weak area.

If the price falls below the 97.80 support, it may further drop to the 97.20 line; on the contrary, if it can break through the pressure above 98.60, it is expected to open up the rebound space. Overall, the short-term trend of the US dollar index is still biased towards weakness. In the future, it is necessary to pay attention to whether the non-agricultural data brings a directional breakthrough.

Editorial opinion:

The dollar index remains stable in the short term, but the overall trend still depends on the game between the labor market and inflation. If the non-farm data is weak, the market may digest the September interest rate cut expectation in advance, and the dollar may be under pressure; if the data is strong, it may delay the urgency of interest rate cuts.

However, judging from the differences among policymakers, the Federal Reserve may continue to maintain a delicate balance between "suppressing inflation" and "supporting employment".