• The US dollar is rangebound ahead of an important US jobs release.
  • Fed chair Powell is hawkish but reiterates that data remains key.

US Treasury bond yields are consolidating their recent move higher ahead of Friday’s Non-Farm Payroll report. Recent hawkish commentary from Fed chair Jerome Powell to US lawmakers sent the yield on the rate-sensitive 2-year UST to a fresh one-and-a-half decade high (5.085%) as Powell doubled down on his higher-for-longer rhetoric. Chair Powell, while backing higher rates, continues to say that all rate decisions will be based on the totality of data, leaving himself a little bit of wiggle room if the outlook for the US economy turns lower. Financial markets are now pricing a 76% probability of a 50 basis point hike at this month’s FOMC meeting, up from around 25% last week.

Friday’s Jobs Report will be closely followed to gauge the strength of hiring in the US. Last month’s release, saw 517k new jobs created, a huge beat on market expectations, albeit with the data boosted by seasonal adjustments. 


The US dollar is currently sitting in the middle of a tight range and consolidating its recent move higher. Tuesday’s bullish candle, post-chair Powell’s testimony, reversed a short-term sell-off and sent the greenback to a multi-week high. The next level of resistance, the 200-dma, is around 125 pips away and is likely to hold unless the NFP numbers beat by a hefty margin. The CCI indicator at the bottom of the chart shows the greenback back in overbought territory.