Dollar Holds Near Two-Month High

The dollar index traded around 99.4 on Thursday, remaining close to a two-month high as stronger-than-expected US labor market data reinforced expectations of tighter Federal Reserve policy. The latest ADP report showed private-sector employment increased by 122K in May, surpassing forecasts and marking the strongest reading since January 2025. Earlier this week, JOLTS data revealed that job openings rose in April to their highest level since November 2024. Investors are now awaiting Friday’s nonfarm payrolls report for further insight into labor market conditions. The dollar also continued to draw support from escalating tensions in the Middle East, which have kept oil prices elevated and added to inflationary pressures. Markets currently assign an 85% probability to a quarter-point Fed rate hike by year-end, up from 60% a week earlier.

DXY increased to 99.54, the highest since April 2026. Over the past 4 weeks, Dollar Index gained 1.18%, and in the last 12 months, it increased 0.76%.

The dollar index strengthened further to 99.4 on Wednesday, reaching the highest level in about two months, after the ADP report showed that the private sector added 122K jobs in May, exceeding expectations and marking a new high since January 2025. The data pointed to a labor market that continues to gain momentum, reinforcing expectations that the Fed could raise interest rates later this year. Earlier this week, JOLTS data showed that job openings in April rose to their highest level since November 2024, further highlighting the resilience of labor demand. The greenback was already drawing support from escalating tensions in the Middle East, which lifted oil prices for a third consecutive session and heightened concerns over inflationary pressures. Markets now price in an 85% probability of a quarter-point Federal Reserve rate hike by year-end, up from 60% a week ago.