FX.co ★ Dollar Holds Near Two-Week High Despite Weak Labor Data

The dollar index trimmed earlier gains to trade roughly flat around 99.7 on Wednesday, as investors weighed the latest ADP employment figures. US private employers added a net 38,000 jobs in August, the smallest increase since January and below the consensus forecast of 47,000, signaling a broader cooling in the labor market. Despite this weaker data, the greenback held near a two-week high as investors sought safety amid mounting worries over the economic fallout from the energy shock and diverging monetary policy trajectories among major economies. Geopolitical tensions also intensified after the US said it had launched overnight airstrikes on targets in Iran, prompting retaliation from Tehran in the most serious escalation between the two countries in weeks. Meanwhile, interest rate futures now imply a 66% probability of a Federal Reserve rate hike in September, up from about 40% a week earlier, according to the CME FedWatch Tool.