The US dollar held steady on Wednesday (September 10th) ahead of US inflation data this week that could help shape the Federal Reserve's policy outlook, while tense geopolitical conditions supported currencies like the Swiss franc.

Last week's employment data showed that the US economy created far fewer jobs than expected last year, making a Fed interest rate cut next week seem a certainty.

However, this did not shake confidence in equity markets, where stocks are trading at record highs, nor did it have a direct impact on the dollar itself, although investors are considering the possibility of a half-point rate cut from the Fed next week.

Israel's attempted assassination of Hamas leaders in an airstrike in Qatar on Tuesday, as well as Poland's downing of a drone that entered its airspace during Russia's offensive in western Ukraine on Wednesday, have unnerved investors.

"The market has already decided, and probably rightly so, that the Fed will cut rates. However, there are many factors influencing prices between now and the end of next year," said Jane Foley, head of FX strategy at Rabobank.

"On the other hand, geopolitical uncertainty is also playing a role. There's news from Poland, there's news from Qatar. Neither is reassuring," she said. The euro weakened against the dollar, but jumped 0.5% against the Polish zloty to 4.268 zlotys, its biggest one-day gain in three months.

In terms of Fed expectations, traders are fully pricing in a quarter-point cut next week, with a small chance of a half-point cut. This week's wholesale inflation report, due on Wednesday, and consumer inflation on Thursday, could influence the outlook for a larger cut, analysts said. (alg)

Source: Reuters