Investing.com – The U.S. dollar strengthened on Friday, continuing October’s strength ahead of the release of a widely watched payrolls report.

At 05:35 ET (09:35 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 104,025, after rising well over 2% last month.

The dollar is waiting for the publication of wage data

Data released Thursday showed inflation on the Fed’s targeted measure of year-over-year growth was 2.1% in September, down from an upwardly revised 2.3% in August and close to the Fed’s target of 2.0%.

Attention will now turn to the US jobs report for October, which will be released later in the session.

Economists estimate that number fell to 106,000, down from 254,000 the previous month, while the growth rate is expected to match August’s gain of 4.1%. Economic growth is also slowing to 0.3% on a monthly basis.

However, these numbers may fluctuate given the potential impact of recent devastating hurricanes and ongoing labor actions.

A quarter of a percentage point cut in interest rates is widely expected next week, and the release of the wages data would have to come as a major surprise given that futures suggest there is a 94 chance of a 25 basis point cut next week. 7%.

“We expect some negative impact on the dollar as some of the strength from the previous jobs report will be priced in and markets may push the Fed valuation back to 50 basis points by the end of the year in easing,” ING analysts said in a report note.

The event preceding Tuesday’s presidential elections was also captivating, when the dollar gained on transactions betting on the victory of the Republican Party candidate Donald Trump.

However, the race against Vice President Kamala Harris seems very close, and therefore a Democratic victory could trigger a acute deterioration in trade.

Caution towards ECB interest rate cuts?

In Europe, quotations fell 0.2% at 1.0861, giving back some of the euro’s gains from the previous session, after data showed the euro zone accelerated more than expected in October, strengthening the case for caution in European Central Bank interest rate cuts .

It has cut interest rates three times this year and is widely expected to make another cut at the end of the year.

“EUR/USD is starting to look a bit more expensive in the upper half of the 1.08-1.09 range and unless there is a push today from US jobs data, we favor some depreciation of the pair by US election day, back to 1 .0800 as fully consistent with the large interest rate differential in favor of USD,” ING added.

rose 0.1% to 1.2917 as investors continue to digest the latest UK budget and UK Finance Minister Rachel Reeves launches massive tax increases.

“Our view is that sterling may fall further as adjustment to higher bond supply comes to an end, but given the rise in short-term GBP swap rates as a result of the BoE re-pricing (only one cut currently expected in 2024), interest rate differentials may soon offer a minimum level to the pound,” ING added.

The yen is falling

rose 0.5% to 152.72, with the yen giving up earlier gains after the Bank of Japan kept interest rates ultra-low but said risks around the U.S. economy were receding slightly.

Governor Kazuo Ueda’s remarks were considered less dovish than those made before the meeting that the BoJ could “afford to take time” to analyze the impact of threats such as U.S. economic uncertainty.

rose 0.1% to 7.1242 even as China’s manufacturing activity returned to growth in October, a private sector survey showed on Friday.

It rose to 50.3, largely in line with the official PMI released earlier in the week.