United States Dollar Index trades subduedly around 101.35 ahead of US NFP data

• The US Dollar Index edges down to near 101.35 ahead of the US NFP data for June.
• Investors will closely track the US Average Hourly Earnings data to get fresh cues regarding the inflation outlook.
• The Fed is almost certain to deliver at least one interest rate hike this year.

The US Dollar (USD) reflects a subdued performance in the countdown to the United States (US) Nonfarm Payrolls (NFP) data for June, which will be published at 12:30 GMT.

At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges lower to near 101.35.

Investors will pay close attention to the US NFP data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook. The US NFP report is expected to show that the economy created 110K fresh jobs, lower than 172K in May. The Unemployment Rate is seen remaining steady at 4.3%.

Average Hourly Earnings, a key measure of wage growth, is estimated to arrive higher at 3.5% Year-on-Year (YoY) from 3.4% in May, with monthly figures rising steadily by 0.3%.

The impact of the US NFP report, especially the Average Hourly Earnings data, will be significant on the Fed’s interest rate expectations, as Chair Kevin Warsh warned at the European Central Bank (ECB) Forum in Sintra on Wednesday that inflation remains “too high”, while stressing the need to bring price stability. As expected, Warsh didn’t offer any cues regarding the Fed's future decisions on interest rates.

Meanwhile, the CME FedWatch tool shows an almost 85% chance that the Fed will deliver at least one interest rate hike.

On Wednesday, both the US ADP Employment Change and the ISM Manufacturing PMI data for June missed estimates. The ADP report showed that the private sector created 98K fresh jobs, lower than the estimates of 113K. The Manufacturing PMI arrived lower at 53.3, while it was expected to remain steady at 54.0.

Warsh rejects forward guidance but doubles down on 2% inflation goal

Fed Chair Warsh delivers a moderately hawkish message, with a FXS Speechtracker score of 5.6/10 that cannot be benchmarked relative to the historical average but still signals a clear focus on price stability. The refusal to provide forward guidance, coupled with the assertion that the Central Bank must judge whether the AI boom is inflationary and the insistence that anyone expecting comfort with inflation above 2% will be disappointed, underscores a data-dependent, independence-focused stance that keeps the Dollar supported while acknowledging AI as a potential macro game-changer. Warsh’s characterization of steady labor markets, a solid supply side, and declining inflation expectations and risks frames the current environment as one where the Fed can “chart a new course” without relaxing the 2% target.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-hawkish level of 123.64, confirming that the speech did not materially shift the broader policy tone captured by the FXS Speechtracker. With the index firmly above 100, the Fed remains in hawkish territory, and the lack of movement suggests markets largely anticipated Warsh’s emphasis on independence, price stability, and cautious engagement with the AI-driven economic backdrop.