FX Daily: Upcoming US Payrolls Report May Keep Currency Volatility in Check

Daily Currencies Ratings — 06 August 2026

USD: Wait-and-See Mood Likely to Dominate

News of an agreement between Iran and Oman to establish a safe shipping route through the Strait of Hormuz — a chokepoint through which roughly a fifth of global seaborne oil trade passes — has sustained a risk-on sentiment in FX markets, encouraging a rotation away from the US dollar toward higher-beta currencies. Nevertheless, G10 currency movements have remained contained this week, most likely because tomorrow's US nonfarm payrolls report — the most closely watched monthly indicator of US labour market health and a notoriously difficult one to forecast — stands as the key upcoming catalyst.

That caution is reflected in interest rate pricing. Market expectations for upcoming Federal Reserve meetings have changed little since July's announcement, with 14–17 basis points consistently priced for September and 30–35 basis points for December. This stability has persisted during a week in which Brent crude fell by $15 per barrel — a clear indication that US rate expectations are currently being driven far more by economic data and Fed communication than by energy prices. On the latter front, Federal Reserve officials Daly, Cook, and Kashkari all delivered hawkish-leaning commentary yesterday.

On the data front, ADP payrolls came in somewhat soft at 44,000, and the ISM services index rose less than anticipated to 54.1. The services employment subindex dropped sharply to 47.5, which, according to ING's macro team, signals some mild downside risks for tomorrow's payrolls figure. The divergence between the soft ADP print and the still-expansionary ISM services headline underscores the uncertainty markets face in positioning for Friday's release.

Markets are also awaiting the next headlines on US–Iran negotiations. There appears to be little remaining pessimism priced into FX markets, meaning positive developments on that topic may not generate sustained dollar weakness. With the payrolls report looming tomorrow, a wait-and-see posture is likely to keep volatility contained and the dollar broadly range-bound.

Francesco Pesole

EUR: Well Supported

EUR/USD has been retesting the 1.1550–1.1560 resistance area, supported by a softer dollar and a solid defence of the 1.1500 level earlier this week. However, there is no clear fundamental catalyst for a break higher unless US data disappoints tomorrow. As noted above, the decline in oil prices is not translating into lower US front-end rates, leaving economic data as the primary driver needed to sustain further gains in the pair.

With the eurozone economic calendar offering little by way of top-tier data releases today, ING maintains a neutral stance on EUR/USD. The pair may stabilise in the 1.1530–1.1550 area ahead of tomorrow's US payrolls report.

Francesco Pesole

SEK: Hotter Core Inflation Not Enough for Hikes

Sweden's CPIF excluding energy — where CPIF (consumer price index with fixed interest rates) is the Riksbank's target inflation measure — unexpectedly accelerated from 0.4% to 0.6% in July. The headline figure slowed as expected, from 1.3% to 0.7%. The slightly elevated core print prompted a modest positive reaction in the Swedish krona this morning. However, markets were already fully pricing in a Riksbank rate hike by year-end, which limited the upside for front-end SEK rates.

Even after adjusting for the temporary tax measures that are artificially suppressing prices, the inflation outlook does not appear strong enough to justify such firm market conviction regarding Riksbank tightening. While hawkish risks have edged higher, ING's baseline view remains unchanged: no rate hikes before year-end. Accordingly, ING continues to foresee a relatively shallow path for EUR/SEK and targets 10.80 by year-end.

Francesco Pesole

CZK: CNB Guidance Likely Less Hawkish Than Market Pricing

July inflation in the Czech Republic brought little surprise, rising from 1.5% to 1.7% year-on-year. Lower food prices partly offset higher fuel costs, while services inflation picked up again to 4.7% YoY, up from 4.5% in June. ING estimates core inflation was broadly unchanged at approximately 2.8–2.9%. Overall, the latest inflation print should have limited implications for today's Czech National Bank (CNB) meeting.

ING expects the CNB to hold rates unchanged at 3.75% at its first meeting following the June hike, which made it the only central bank in the CEE region to tighten policy — a stance that stands in contrast to the easing or hold biases observed at peer institutions across central and eastern Europe. Attention will focus on the governor's forward guidance and the new CNB forecast. ING anticipates downward revisions to GDP, slightly lower headline inflation, and a lower EUR/CZK path, while stronger wages, higher EUR rates, and eurozone PPI should point to a more meaningful upward revision elsewhere. Overall, the picture should be mixed, but relative to current market pricing, the meeting is expected to lean dovish.

Despite the recent rates rally across the region, the Czech curve still prices two hikes — the most in EMEA. The governor is likely to keep the door open to one additional hike, but this would still be more dovish than what markets are currently pricing.

The Czech koruna has lagged its CEE peers in the latest global relief rally, reflecting its stronger sensitivity to rates compared with elsewhere in the region and its lower beta — meaning it tends to move less in response to broad shifts in risk appetite than higher-beta regional currencies. In ING's view, market pricing of further tightening should keep the CZK on the weaker side, with EUR/CZK likely to trade around the 24.20–24.25 range.

Frantisek Taborsky

Source: ING