Dollar Steadies Near 99.11 as Firm Payrolls Cement Fed Hike Bets

The Dollar Index sits at 99.1110, up 0.15% — a level carried over from Friday's completed session rather than a fresh live read, since cash FX markets are shut for the weekend (today is Saturday, September 5). That's a recovery from Thursday's more-than-one-week low of 98.83, and puts the index back near the 99.20 area it regained after the data. The move traces to Friday's US August jobs report: nonfarm payrolls rose 162,000 against a consensus near 53,000, with unemployment steady at 4.1%. Traders responded by lifting the implied odds of a Fed rate hike at the September 15-16 meeting to around 60% on the CME FedWatch Tool, from roughly 50% before the release, with swaps pricing near 63% per Prime Terminal (FXStreet, Sept 4).

US yields ticked higher on the day: the 5-year added 3.4bp to 4.543%, the 10-year 1.4bp to 4.776%, and the 3-month bill 2.3bp to 3.763%, while the 30-year eased 0.5bp to 5.238%. These are modest moves next to Friday's real repricing: the payrolls beat pushed Fed September hike odds to about 60% on CME FedWatch (versus roughly 50% pre-release) and near 63% in swaps, per Prime Terminal (FXStreet, Sept 4). The policy backdrop remains unusual — the Fed funds target sits at 3.50-3.75%, and the live 2026 question is whether the Fed hikes further, not whether it cuts.

EUR/USD: 1.1612, down 0.11%, pulling back toward 1.16 as the payrolls-driven dollar bid persists. GBP/USD: 1.3514, down 0.08%, having rebounded off Friday's post-data intraday low of 1.3482. USD/JPY: 156.15, up 0.22%, extending Friday's recovery from the ~155.30 area after Thursday's sharp yen rally to a one-month high near 155.28. USD/CAD: 1.3839, up 0.33%, building on Friday's roughly 0.5% advance after Canadian employment fell 42,000 in August versus a +15,000 consensus.

EUR/USD trades at 1.1612, down 0.11% on the day, continuing Friday's slide toward the 1.16 area after the US payrolls beat revived the dollar. Friday's pullback followed Eurostat's flash estimate showing euro-area annual inflation rising to 3.3% in August from 2.9% in July, led by energy prices up 14.3% year-on-year. That keeps a 25bp ECB hike to a 2.50% deposit rate at the September 10 meeting widely expected and effectively priced in, per FXStreet's ECB preview (Sept 4). ECB President Christine Lagarde held rates at 2.25% in July, citing high energy prices while leaving the door open to a September move. With no major eurozone releases identified for Monday, September 7, the next catalyst is the ECB Governing Council decision on Thursday, September 10, due 14:15 CET, followed by Lagarde's press conference at 14:45 CET.

No scheduled events were identified for today (calendar data limited; check forexfactory.com directly). Monday, September 7 is Labor Day/Labour Day, closing US and Canadian equity and bond markets, with FX trading thin. Japan's Cabinet Office releases its revised (second preliminary) Q2 GDP on Tuesday, September 8. The UK calendar builds through the week: BRC Retail Sales Monitor (Sept 8), RICS House Price Balance (Sept 10), and GDP, trade balance, industrial and manufacturing production, construction output and the NIESR GDP tracker on Sept 11. The ECB Governing Council decision lands Thursday, September 10 (14:15 CET), with Lagarde's press conference at 14:45 CET. Further out: UK labour market data Sept 15, the BoE decision Sept 17, and the BoJ's Sept 17-18 meeting.