Markets jumped back on long dollar positions yesterday as global risk sentiment deteriorated and equities came under pressure. Together with continued peace talks today, markets will focus on US March payrolls. The release should help markets cement expectations around two 50bp hikes in May and June, which could further support the dollar, economists at ING report.

Payrolls to support back-to-back 50bp Fed hikes

“The dollar, yen and Swiss franc are heading into the weekend with a tailwind, which will however be challenged by more peace talks between Russia and Ukraine today. Even if some fresh optimistic headlines dampen safe-haven demand, we think the dollar is the least likely to lose ground today, as US payrolls may offer some support.”

“We expect a 500K headline NFP reading today, in line with the consensus at 490K. This should be enough to help markets cement expectations around two 50bp rate hikes in May and June, which is also our base-case scenario. This, in turn, may leave the dollar more protected in the event of a rebound in risk appetite.”

See – NFP Preview: Forecasts from 10 major banks, another large gain for employment anticipated