NFP Week Drives Dollar, Euro, Pound

Ahead of the July U.S. Non-Farm Payrolls report, currency markets are focused on labor data and central bank policy. The United States — Federal Reserve held rates at 3.50%-3.75% last week, reaffirming data-dependence under Chair Kevin Warsh. Futures markets now price a 59% chance of a September rate hike, down from 67%. The U.S. dollar index (DXY) trades near key support around 99.8, testing its long-term uptrend. The European Union — European Central Bank kept its deposit rate at 2.25%, and the United Kingdom — Bank of England held its Bank Rate at 3.75%. Upcoming data include ADP, JOLTS, ISM Services PMI, and UK labor and growth figures. Falling energy prices and reduced Middle East supply concerns support the euro and pound.