FOREX-Dollar set for weekly gain as traders eye Iran talks, US jobs data

The US dollar is poised for a weekly gain, driven by safe-haven appeal, ahead of the closely watched US payrolls report, which could influence the Federal Reserve's interest rate path.

The dollar was little changed on the day on Friday ahead of the monthly U.S. payrolls report, but was still headed for a weekly gain against major peers as uncertainty about an Iran peace deal ‌buoyed the U.S. currency's safe-haven appeal.

The closely watched payrolls report could provide more clues on the Federal Reserve's rate path as markets are weighing the chance of a potential interest rate hike. U.S. nonfarm payrolls are forecast to have risen by 80,000 last month after an increase of 57,000 in June, according to a Reuters survey of ‌economists. The unemployment rate is expected to hold steady at 4.2%.

"It is all about payrolls today," Nick Rees, head of macro research at Monex Europe, said, ‌noting that there could be a "modest" dollar sell-off if the report comes in softer than expected. The dollar index — which measures the currency against a basket of six major peers, including the euro, yen and sterling — was a touch higher on the day at 99.975, up 0.17% for the week, following a 1.6% plunge the previous week.

The greenback traded little changed at 158.43 yen, after gaining 0.4% ⁠on Thursday. That ​kept the dollar-yen pair on course ⁠to rise around 0.5% this week, as it recovered from a bout of joint Japan-U.S. intervention that sent it tumbling from near a four-decade high above 163 to a 13-week low of 155.20 on ⁠Monday.

Against the euro, the dollar was steady at $1.1518, and the U.S. unit was virtually flat versus sterling at $1.3444. Tensions continued to play out in the Gulf after Reuters reported a proposed ​deal between Iran and Oman to help end the U.S.-Iran conflict could give Tehran control over inbound traffic through the Strait of Hormuz. The U.S. ⁠did not immediately comment on the proposal. President Donald Trump has said that a deal to reopen the strait was imminent, but U.S. officials have repeatedly insisted that they would never agree to Iranian ⁠control ​of access to the world's most important trade route for energy supplies.

Brent crude rose 0.8% on Friday to trade at $83.2 per barrel. The heightening inflation risks have weighed on Treasuries, sending yields higher.

"USD was supported by higher oil prices (following) news that a deal between the U.S. and Iran to reopen the strait is further ⁠away than hoped," Kristina Clifton, an economist at Commonwealth Bank of Australia, said. She and other analysts also pointed to a Financial Times report citing sources close ⁠to Federal Reserve Chair Kevin Warsh that referred ⁠to the potential for a September interest rate hike, depending on incoming data — though Clifton added: "We expect the Fed to wait until December before starting a modest tightening cycle."

A divided U.S. central bank left rates unchanged last month, but Warsh said ‌he was committed to ‌bringing inflation down.