Dollar Steadies Near 99.10 as Payrolls Revive Fed Hike Bets

The Dollar Index is at 99.1040, up 0.14% — a level that reflects Friday, September 4's completed US session, with cash FX shut over the weekend rather than a fresh, still-open move. That session followed Friday's US payrolls report, which printed +162,000 jobs for August against roughly +56,000 expected, unemployment steady at 4.1%, and June-July payrolls revised up a combined 55,000 (per Capital Street FX). The beat lifted the broad dollar and pushed market-implied odds of a Fed rate hike to near 60%, per FXStreet. Equities slipped in Friday's session: the S&P 500 fell 0.44%, the Dow 0.81%, the Nasdaq 0.29%, while the VIX rose 1.47% to 14.53. Gold eased 0.96% to 4430.07 and WTI crude slipped 0.48%. Monday brings a Labor Day holiday in the US and Canada, thinning liquidity into the new week.

Treasury yields ticked higher on the day: the 10-year added 2.2bp to 4.784%, the 5-year rose 4.1bp to 4.550%, the 3-month added 1.7bp to 3.757%, and the 30-year was little changed, up 0.3bp to 5.246% (Yahoo reference). These are modest moves on their own — the bigger shift is in policy odds. With the Fed funds target at 3.50-3.75% and the live 2026 question being whether the Fed hikes rather than cuts, Friday's payrolls beat pushed market-implied odds of a September hike to roughly 58-60%, up from about 49-52% a day earlier, per desk-cited CME FedWatch and Capital Street FX figures. Separately, headlines flagged renewed White House pressure for the Fed to lower rates — a political overlay distinct from what markets are actually pricing.

EUR/USD sits at 1.1614, down 0.10%, having slipped after Friday's payrolls beat even as euro-area inflation accelerated to 3.3% in August, keeping a 25bp ECB hike to a 2.5% deposit rate priced at roughly 87% for Thursday's meeting (per centralbank.watch). GBP/USD is at 1.3516, down 0.06%, having dipped to about 1.3482 on Friday before paring losses; the BoE is priced around 90% to hold its 3.75% rate on September 17 (per centralbank.watch). USD/JPY trades at 156.24, up 0.28%, bouncing off a one-month low near 155.28 as BoJ hike bets for the September 17-18 meeting and MoF alert comments continue to cap upside. USD/CAD is at 1.3836, up 0.31%, after Friday's jump followed a surprise 42,000 drop in Canadian August employment against the BoC's hawkish hold at 2.25%.

GBP/USD is trading at 1.3516, down 0.06% on the day. Friday, September 4's US payrolls beat (+162,000 versus roughly +56,000 expected) briefly pushed the pair to about 1.3482 as the dollar firmed broadly, but it pared the loss back to the 1.3510-1.3512 area as traders doubted the jobs data alone would secure a Fed hike. Separately that day, Bank of England Governor Andrew Bailey told the LSE TRIUM Anniversary Conference there are 'very, very substantial challenges at the moment, structural challenges,' citing weak productivity, COVID-era shocks, ageing populations and defence spending — fiscal commentary, not a rates signal. The next MPC decision is September 17, with Bank Rate at 3.75% and roughly 90% odds priced for a hold (per centralbank.watch). Monday's calendar is light; Tuesday brings a BoE Monetary Policy Report hearing before the Treasury Select Committee, ahead of US CPI and the Fed and BoE decisions later in the month.

Monday, September 7 is a public holiday in both the US (Labor Day) and Canada (Labour Day), so equity, bond and FX-adjacent desks should see thin holiday liquidity. Also due Monday: Eurozone Sentix Investor Confidence for September (release time not confirmed) and, from Japan, preliminary Coincident and Leading Economic Indices plus FX reserves data. Tuesday, September 8 brings Japan's Average Cash Earnings, Current Account, Bank Lending, Eco Watchers Survey and final Q2 GDP, alongside a BoE Monetary Policy Report hearing before the UK Treasury Select Committee. Later in the week: US August CPI and the ECB rate decision Thursday, September 10 (2:15pm CET, with President Lagarde's press conference at 2:45pm CET). Note: today's standard economic calendar feed returned no scheduled items; the above is drawn from desk notes.