Dollar advances ahead of NFP, yen weakens on data

The dollar gains ground ahead of key US jobs data, while the yen struggles with weak household spending and Middle East tensions return, lifting oil prices.

Major currency dynamics

• While our strength gauge indicates the euro as the strongest major currency today, and the New Zealand dollar as the weakest, the US dollar has shown broader advancement across the board. The dollar's rise comes ahead of upcoming Non-Farm Payrolls data, supported by rising yields and hawkish comments from the Federal Reserve's Musalem, who backed rate hikes, stating inflation remains too high.
• The Japanese yen hovers near a weekly low. This follows weak household spending data for June 2026, which fell by -6.4% month-over-month against an expected -3.1%, complicating the Bank of Japan's rate path.
• The New Zealand dollar came under pressure, falling against the appreciating US dollar.
• The Mexican peso strengthened, extending what the headlines describe as a 10-day rally.
• The Chinese yuan showed a bullish tone against the US dollar, according to UOB. The South Korean won also found support against the dollar, attributed to a stable Federal Reserve outlook and AI demand per ING, with Societe Generale noting a developing flows investment case for the KRW.

Geopolitical risk and commodities

• WTI crude oil holds firm near $77.50, as rising Middle East tensions reportedly threaten oil supply routes. This marks a shift from yesterday's de-escalation narrative, with the Strait of Hormuz risk returning and contributing to geopolitical risk premiums in the market. The jump in oil also lifted Treasury yields and revived Fed rate-hike bets, helping the dollar recover from this week's seven-week low.
• Gold consolidates below $4,250 after surging to a seven-week high yesterday, as renewed US dollar strength and rising Fed rate-hike bets cap the metal ahead of the payrolls report.

Market metrics and upcoming data

• Our proprietary market readiness gauge (MRS) currently stands at 64, suggesting a market primed for movement. The carry trade score (CTS) is high at 80, while the market sentiment gauge (FSI) indicates a neutral reading of 60.

Key events today

• CAD · Employment Change: SCHEDULED — forecast 17.8K vs previous 18.2K
• CAD · Unemployment Rate: SCHEDULED — forecast 6.5% vs previous 6.5%
• USD · Non-Farm Employment Change: SCHEDULED — forecast 85K vs previous 57K
• USD · Unemployment Rate: SCHEDULED — forecast 4.2% vs previous 4.2%