Having sold off around 5% since the start of July, the US D (USD) rebounded last week. Clearly, the USD bear trend needs to be fed and there was little on offer last week. It is a different story this week. After today's US Labor Day public holiday, the US data calendar picks up with ISM manufacturing data (Tuesday), JOLTS job opening data Wednesday, ADP, jobless claims, and ISM services (Thursday), and then the main event of the week, the August jobs report on Friday, ING’s FX strategist Chris Turner notes.

DXY to trade quietly amid the US holidays

If the consensus is right about Friday's jobs report (165,000 job gains and a drop in the unemployment rate back to 4.2%) then market pricing will firm up just a 25bp cut as the start to the Fed easing cycle on 18 September. Payrolls could come in at just 125k, but the unemployment rate could tick up to 4.4%. If so, the USD will be back to test recent lows as the pendulum swings back to a 50bp Fed rate cut in September.

We'll also see this week whether US opinion polls start to register in FX markets. Arguably, the dollar sell-off since July has been assisted by the improved polling performance of the Democrats. As we now enter the run-up to November, opinion polls will become ever more important and certainly, this will be a hot topic next week after the first Harris-Trump TV debate which takes place on 10 September.