U.S. Jobs Report on the Horizon: Dollar Soars Amid Global Tensions

The dollar held near a six-week high on Friday ahead of a crucial U.S. payrolls report that could influence future interest rate decisions. Safe-haven demand has also boosted the dollar due to rising Middle East tensions and concerns about the global economy. The dollar index (DXY) rose close to its six-week peak, marking its strongest performance since April.

The yen gained 0.5%, recovering some ground but remained near its recent low. This follows comments from Japan’s leadership, indicating that rate hikes are unlikely in the near future. Japan’s upcoming elections are expected to further shape monetary policy.

Attention is focused on the U.S. non-farm payrolls report, which is expected to show 140,000 new jobs, while unemployment is forecasted to remain steady at 4.2%. A stronger jobs report could influence the Federal Reserve's decisions on interest rate cuts, with markets currently expecting a 33% chance of a rate cut in November.

The British pound was under pressure after remarks about potential rate cuts, while the euro and Australian dollar remained steady but showed weekly declines.