USD: Politics and economics - Rabobank

There is no doubt that safe-haven demand has been having an impact on asset prices in the past few sessions. Fears of an escalation in the Middle East crisis have put oil prices on course for their biggest weekly gain since 2023 while the USD is the best performing G10 currency on a 5-day view as it claws back a little part of its recent losses, Rabobank's FX analyst Jane Foley notes.

Fed to announce three more 25 bp rate cuts until January 2025

"While the monthly US non-farm payrolls report is both flawed and subject to significant revision, it remains the most watched data event of the month. Consequently, this afternoon's release will have a lot of sway on determining expectations regarding the likely size of the Fed's policy move next month and potentially into early next year. It is Rabo's house view that the Fed will announce three more 25 bp rate cuts between now and January 2025."

"Not all Fed officials share Powell's confidence. Bowman recently commented that inflation remains 'uncomfortably above the committee's 2% goal' while Barken repeated that it was too early to declare victory on inflation. Indeed, this week's rise in oil prices, if sustained, would bring a fresh inflation risk."

"The printed market consensus for today's NFP number stands at 150K, though clearly the revision announced for the past two months will impact how this number is interpreted. There has been a spate of other US labour data releases in recent sessions. The correlation between the various series can be lacking, at least until all of the revisions are in.  That said, the messages contained in the various different labour indices can provide clues as to the broad health of the labour market."