DXY: US Dollar Index Dives Under 101 as Forex Traders Brace for Key August Jobs Data

All eyes on American employment figures today — analysts expect to see 164,000 new hires. But what if that’s not the case?

• The dollar index DXY slipped to start Friday trading with rival major currencies gaining ground ahead of a key report release. The greenback’s gauge, tracking the dollar’s value against six other currencies, took a dive under 101 and was poised to wrap up its third straight day of declines. But, before the closing bell, there’s a big test to the US economy — the nonfarm payrolls for August.
• Traders are already on the edge of their seats in anticipation of what the data will show. Analysts are aligned for 164,000 hires tapped to have joined the workforce last month. And that’s what will be driving trading today. But what if things don’t pan out as intended? A surprise twist may turn markets on their heads, echoing the reaction to the jobs report for July, released early August.
• A reading that’s too hot may mean that the US economy wouldn’t need much support from the Federal Reserve. It would alleviate recession fears. A report that’s too cold, on the other hand, is likely to send markets spiraling and investors scrambling. It would mean that the Fed could go for a bigger interest rate cut, leapfrogging the 25bps consensus cut for a juicier 50bps trim to interest rates.