Fed policy tension keeps dollar volatility elevated ahead of payrolls

Cooler August PCE, weak payroll implications and Goldman Sachs' view that the Fed may be near the end of its hiking cycle have increased the risk of an October hold and a dollar correction. This remains opposed by Williams, Kashkari and Hammack, who stress persistent inflation and supply-shock risks. Payrolls, ISM, CPI and FOMC communication will determine whether DXY extends toward 101.6-101.8 or reverses through crowded long positioning.