Closing the trade at the end of last week brilliantly, the US dollar managed to record its best weekly trading performance since 2022.
Last Friday's New York session, the full focus of the market was on the United States (US) NFP employment data report for September which came with strong figures.
Looking at the report, US job gains jumped by 254,000 well above the low forecast of 147,000. The figure is also higher than the increase in August which was updated to 159,000.
Average hourly earnings increased by 0.4%, beating the forecast of 0.3%, while the unemployment rate was positive when it recorded a decrease to 4.1% compared to the previous forecast to remain at 4.2%.
Therefore, the US dollar received an additional injection when the market environment during the past week was risky due to the issue of the Iran-Israel war which gave an advantage to the safe-haven currency.
The latest jobs report also reduced expectations for the Federal Reserve (Fed) to continue cutting interest rates at the remaining 2 meetings at the end of 2024.
Last September, the Fed acted aggressively by lowering interest rates by 50 basis points, but Fed Chairman Jerome Powell remained cautious in his tone, saying decisions would be made from one meeting to another and would be based on the latest available data.
With this strong September NFP report, Powell is likely to withdraw his previous view that there will be 2 more interest rate cuts for November and December.
After jumping to a 7-week high, the US dollar is likely to maintain that positive momentum this week with the next focus on US inflation data which is the Fed's main indicator.
