US Dollar Supported by Strong Labor Market Data, Investors Cheer JOLTS Report

US Dollar Supported by Strong Labor Market Data, Investors Cheer JOLTS Report

Posted Tuesday, August 10, 2021 by
Aiswarya Gopan • 1 min read

Investors continue to trade the US dollar with a positive mood into Tuesday, with rising expectations that the strong labor market report for July would encourage the Fed to consider tapering its monetary stimulus measures soon. At the time of writing, the US dollar index DXY is trading at around 92.97.

With the likelihood of tightening monetary policy sooner than originally planned on the rise, US Treasury yields have been soaring, further supporting the US dollar’s bullish moves. Meanwhile, the greenback’s fresh infusion of strength has hit safe havens hard, with the Swiss franc losing over 1.5% of its value since Friday even as gold slipped close to the $1,700 mark.

The dollar received additional support after the latest US JOLTS report revealed that job openings surged higher by 590k to touch a record high reading of over 10 million on June 30. This further boosted the positive sentiment in markets driven by July’s NFP report, reinforcing expectations that the US labor market was recovering strongly.

In addition, recent comments from Fed officials also raised hopes for markets to start expecting discussions around a possible timeline for the tapering measures to begin. According to Atlanta Fed President Raphael Bostic, bond purchases could start by Q4 2021, while Boston Fed President Eric Rosengren suggested that the US central bank could make an announcement as soon as next month.

Investors now turn their attention to the release of US consumer prices data due on Wednesday, which will shed light on the state of inflation in the country. Economists expect the headline CPI to pick up from 5.3% YoY in June to 5.4% YoY in July while the core CPI could decline from 4.5% YoY in June to 4.3% YoY during July.

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