The US Dollar Index rose Thursday, after its significant losses in the past few days and traded in a range of around 103.15 and 103 points at the start of trading today, Friday, in the Asian session. This came after the release of strong US employment figures and a sharp rise in US Treasury bond yields, coinciding with risk aversion in the markets.

It is worth noting that risk aversion in the markets is intensifying because strong US employment data mostly supports the hawkish expectations of the Federal Reserve, even amid recession concerns and weak headline news related to China and the tensions between the US and China, which, in turn, support the strength of the US Dollar Index.

Yesterday, the US non-farm payrolls change recorded the largest one-month increase since February 2022, reaching 497,000 jobs for June. Additionally, both the services purchasing managers’ index (PMI) and jobless claims also increased. Currently, US Treasury Secretary Janet Yellen is visiting China, where she will meet with the Chinese State Councilor and some officials to discuss solutions to the “unfair practices” described by the Biden administration.

As a result, Wall Street closed notably lower yesterday and is currently trading in the red zone, coinciding with the rebound in US Treasury bond yields, which reached their highest level in several days before retracing slightly. Today, Friday, the markets are anticipating the release of the US non-farm payrolls data (NFP), which is considered crucial for clear signals about the expectations of the US Dollar Index. If the jobs report is positive, the dollar may experience further gains, and vice versa.

All of these economic events come after almost all members of the Federal Open Market Committee (FOMC) have agreed to resume interest rate hikes in July by around 0.25% during the latest FOMC meeting minutes. This highlights the hawkish bias in the monetary policy of the US central bank and supports expectations of a rise in the US Dollar Index.