Dollar remains on the backfoot ahead of non-farm payrolls

The greenback’s grind lower has continued this week amid falling US Treasury yields and strong  appetite for risk. While comments from numerous Fed speakers (including Chair Powell today) continued to point to an extended pause, PCE data and November’s ISM survey out of the US seemed enough to maintain hopes for a “soft landing” and an easing of Fed policy next year. The main focus of markets next week will be the latest non-farm payrolls report. We expect payrolls growth to have accelerated a bit, so for now the trend of the US dollar edging lower against most currencies seems likely to continue as the “Goldilocks” narrative remains firmly in place.