Dollar Slips to 98.86 as Waller Comments Ease Hike Bets Before Payrolls

The Dollar Index sits at 98.8640, down 0.63% with the New York session still open, roughly three hours from the close, so this is not yet the day's final print. The move sits alongside a broader risk-on tape: the S&P 500 is up 1.18% to 7757.90, the Nasdaq up 1.50%, the Dow up 1.16%, and the VIX down 4.41% to 14.53. Treasury yields eased across the curve — the 10-year down 4.0bp to 4.756%, the 5-year down 5.0bp to 4.502%, the 30-year down 2.8bp to 5.239%, and the 3-month down 2.7bp to 3.745%. Reuters linked the easier yields and rallying stocks directly to Fed Governor Waller's comments. Gold (+2.25%) and silver (+2.75%) also gained.

Fed funds sit at 3.50-3.75%, with the live question this cycle centered on whether the Fed hikes further, not on cuts. Fed Governor Waller said he was 'finally seeing some signs of disinflation' and that the September rate call 'hinges on August inflation' — comments CNBC reported as indicating he would support holding rates steady at the September meeting. That tempered hawkish bets built up since Fed Chair Kevin Warsh's August 28 Jackson Hole speech, which warned inflation progress had been insufficient. As noted above, Reuters tied the same easier yields and rallying stocks directly to Waller's remarks. Today's August Non-Farm Payrolls (22:30 Sydney time), forecast at 55K versus July's -23K, plus wage and unemployment data, is the next test of that repricing.

EUR/USD: 1.1633 (+0.38%), building on Thursday's rise to around 1.1622 on broad dollar weakness; a Reuters poll found all 65 economists surveyed expect the ECB to raise its deposit rate 25bp to 2.50% on September 10. GBP/USD: 1.3539 (+0.41%), lifted by the same dollar softness rather than sterling-specific news, with gains capped by UK fiscal uncertainty and geopolitical risk aversion. USD/JPY: 155.47 (-2.05%), extending Thursday's yen rally on hawkish Bank of Japan repricing after Governor Kazuo Ueda said the BoJ must pay 'greater attention than before to upside risks.' USD/CAD: 1.3785 (-0.42%), still soft after the Bank of Canada's September 2 hold at 2.25%.

USD/CAD trades at 1.3785, down 0.42% with the New York session still open. Thursday's session saw the pair extend losses as the Canadian dollar firmed following the Bank of Canada's September 2 decision to hold its policy rate at 2.25% (Bank Rate 2.50%, deposit rate 2.20%) while flagging that upside risks to inflation have 'increased' from elevated oil prices and new US/Canada tariff measures — a hawkish hold. The BoC statement itself noted the Canadian dollar 'has appreciated slightly on US-dollar weakness.' Oil remains supportive: WTI is at 91.33 (+0.78%) and Brent at 95.54 today. The next move is a jobs-day story: Statistics Canada's Employment Change (forecast 15.1K vs July's 75.1K) and Unemployment Rate (forecast 6.4%) land at 22:30 Sydney time, alongside US Non-Farm Payrolls at the same hour.

Today's calendar: German Factory Orders m/m (16:00, forecast 0.3% vs previous 3.1%); Italian Retail Sales m/m (18:00, forecast 0.2% vs -0.1%); UK Construction PMI (18:30, forecast 45.8 vs 44.7); BoE Governor Bailey speaks (18:50, high impact); Eurozone Retail Sales m/m (19:00, forecast 0.3% vs -0.3%). At 22:30: Canadian Employment Change (forecast 15.1K vs 75.1K) and Unemployment Rate (forecast 6.4% vs 6.4%), alongside US Average Hourly Earnings m/m (forecast 0.3% vs 0.1%), Non-Farm Payrolls (forecast 55K vs -23K) and Unemployment Rate (forecast 4.1% vs 4.1%). Canada's Ivey PMI (forecast 56.2 vs 55.1) follows just after midnight Sydney time, technically tomorrow's release.