US Dollar Index fits below 103.60 as hawkish Fed bets trim, US NFP in spotlight

The US Dollar Index (DXY) is auctioning below the crucial support of 103.60 in the Tokyo session. The USD index was heavily dumped by the market participants in the New York session amid a cheerful market mood. Dovish commentary from Federal Reserve (Fed) policymakers eases chaos in financial markets.

S&P500 futures have carry-forwarded bullish sentiment lived on Thursday as a seventh straight contraction in United States ISM Manufacturing PMI bolstered the need of pausing the policy-tightening spell to avoid recession. However, upbeat labor market conditions are still pegging the need of raising interest rates further

Fed Parker and Jefferson support a pause in June

Dovish commentary from Philadelphia Federal Reserve Bank President Patrick Harker as he stated on Thursday that he believes it is time for the central bank to 'hit the stop button' for at least one meeting shrugged off negative market sentiment. Also, Fed Governor Philip Jefferson said in a speech on Wednesday that pausing rate hikes at the next FOMC meeting would offer time to analyze more data before making a decision about the extent of additional tightening. He added that a pause does not mean that rates peaked. An escalating number of dovish Fed policymakers has trimmed hawkish Fed bets.

US NFP is in the spotlight

To get clarity about US labor market health, investors will keep an eye on the US Nonfarm Payrolls (NFP) data. Considering the upbeat release of upbeat US Automatic Data Processing (ADP) Employment Change (May), which showed an addition of 278K jobs, significantly higher than the estimates of 170K, US NFP could be solid too.

Analysts at SocGen believe job growth is moderating, yet the pace remains strong. They predict a 210K advance in May NFP, and the Unemployment Rate holding at the 3.4% low. On wages, THEY expect a more modest 0.2% MoM increase.