US Dollar Index hovers around critical support of 108.70, US NFP eyed

• The DXY is auctioning around the immediate support of 108.70 ahead of US NFP data.
• Fed policymaker has maintained a hawkish stance on interest rates.
• The US NFP is expected to land at 300k vs. 528k reported for July.

The US dollar index (DXY) is displaying topsy-turvy moves at open and is hovering around the immediate cushion of 108.70 in the early Tokyo session. The asset is oscillating in a tad wider range of 108.66-108.87 on a broader note. Investors should be aware of the fact that the asset has turned sideways after a downside move from 109.11, therefore, investors should brace for a volatile session ahead.

Fed Williams sees interest rates above 3.5%

Inflationary pressures have remained major headwinds for the Federal Reserve (Fed) and households in the US economy this year. Well, the Fed has already accelerated its interest rates to 2.25-2.50% this year to combat price pressures. The price rise index has not displayed a meaningful response yet and demands more restrictive measures. New York Fed Bank President John Williams sees interest rates a little above 3.5% to scale down the inflation rate to near 2.5-3% by next year.

Upbeat Consumer Confidence supports DXY

The DXY displayed a stellar performance on Tuesday after the US Conference Board released the Consumer Confidence at 103.2, significantly higher than the prior release of 95.3, recorded in July. An improvement in the confidence of consumers warrants more retail demand further, which will underpin the DXY ahead.

US NFP hogs limelight

As per the preliminary estimates, the US Nonfarm Payrolls (NFP) is seen at 300k, lower than the prior release of 528k. Also, the Unemployment Rate is expected to remain stable at 3.5%. The economic data which could impact the greenback is the Average Hourly Earnings, which is likely to shift higher by 10 basis points (bps) at 5.3%. As price pressures are advancing dramatically, earnings have remained subdued.

Key data this week: ADP Employment Change, Initial Jobless Claims, ISM PMI, Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings.