The US dollar index, a measure of the greenback's performance against a basket of other major currencies, traded little changed as the European session got underway. Investors are refraining from placing aggressive bets ahead of the release of the closely watched US Non-Farm Payrolls report, due later today. The market currently expects at least one further interest rate increase from the Federal Reserve before the end of the year, as investors anticipate that the central bank will respond to the inflationary pressures created by the US-Iran conflict and the resulting rise in energy costs. Against this backdrop, the US labour market data will be closely scrutinised by currency traders. A strong reading, pointing to a resilient jobs market in the world's largest economy, is likely to reinforce expectations of a Fed rate hike and provide further support for the US dollar. Conversely, weaker-than-expected figures could undermine the case for higher borrowing costs and weigh on the greenback.
Ricardo Evangelista, ActivTrades
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