The US Dollar Index (DXY) has attracted buyers for the fifth consecutive day, climbing above the 102.00 mark during the Asian session on Friday and remaining close to its highest level since April 2025, touched the previous day. This marks strong gains for the third week in a row, as traders await the US Nonfarm Payrolls (NFP) report, which is expected to show an addition of only 90,000 jobs in September, a notable slowdown from the previous month's 162,000. The Unemployment Rate is projected to hold steady at 4.1%, and annual wage inflation will be closely watched for cues on the Federal Reserve's future policy path amid receding October rate hike bets [1][2].
The USD/CAD currency pair rebounded after losses in the previous day, trading around 1.4230 during Asian hours on Friday. The US Dollar's strength is supported by persistent inflation concerns from elevated energy costs and market expectations of higher US interest rates. Meanwhile, the Canadian Dollar is under pressure due to falling crude oil prices, as regional supply flows from the Middle East have largely recovered to prewar levels. However, skepticism remains about the sustainability of this recovery, especially after attacks on at least three tankers in the Strait of Hormuz and repeated strikes on regional refineries by Iran and its Houthi allies [2].
Geopolitical tensions continue to provide a tailwind for the safe-haven USD. The Pentagon is reportedly considering the deployment of a third aircraft-carrier strike group and 10,000 sailors and Marines to the Persian Gulf, following President Donald Trump's statement that increased military strikes against Iran are "possible" after the November midterm elections. Iran’s Persian Gulf Strait Authority (PGSA) reported several tanker attacks in the Strait of Hormuz in recent days, keeping the geopolitical risk premium in play and validating the positive outlook for the DXY [1][2].
Technical analysis shows the DXY holding well above the 200-day Simple Moving Average (SMA), with the recent breakout through the 101.70 horizontal barrier reinforcing a constructive near-term bias. Bulls may look to test resistance near the 102.65-102.70 area before aiming for the 103.00 mark [1]. According to TD Securities, the Bank of Canada (BoC) is seen in no rush to hike rates despite flat growth in July, with the current backdrop supporting a more measured approach to future policy moves rather than accelerated tightening [2].
The US Dollar was the strongest against the Australian Dollar this week, according to a table showing percentage changes against major currencies [1].
CONCLUSION
The US Dollar Index is trading near multi-year highs, buoyed by persistent inflation concerns, geopolitical tensions, and expectations for a slowdown in US job growth. The Canadian Dollar is weakening amid falling oil prices and cautious Bank of Canada policy. Market sentiment favors the USD as a safe haven, with geopolitical risks and upcoming US employment data likely to drive further volatility.