The US Dollar traded within a narrow range on Thursday as investors waited for crucial US employment data that could provide fresh signals on the Federal Reserve’s interest rate path.
Meanwhile, the Japanese Yen remained near 40-year lows against the Dollar, while subdued trading ahead of a US holiday kept markets alert for any potential currency intervention.
The Dollar index, which tracks the greenback against a basket of major currencies, edged down 0.1% to 101.32.
Economists surveyed by Reuters expect Thursday’s jobs report to show that US employers added 110,000 jobs in June, with the unemployment rate forecast to remain unchanged at 4.3%.
Federal Reserve Chair Kevin Warsh said on Wednesday that inflation expectations and price pressures have moderated in recent weeks. At the same time, the ADP National Employment Report indicated that private-sector job growth came in below expectations, reinforcing signs of a cooling labour market.
The greenback has remained supported by growing expectations that the Federal Reserve will raise interest rates further this year. Confidence in the US economy has also been reinforced by a resilient labour market, with job growth surpassing forecasts over the past three months.
Additional support for the Dollar has come from strong capital inflows into US assets, driven in part by the rapid expansion and adoption of artificial intelligence technologies.
At the time of writing, the Euro was trading at $1.135 against the Dollar, while the British pound strengthened by 0.13% to $1.3288.
In addition, the Japanese Yen strengthened 0.23% against the Dollar to 162.18 per Dollar, recovering slightly after falling to a fresh 40-year low of 162.84 on Wednesday.
Despite the modest rebound, the Yen remains one of the weakest major currencies this year, with the US Dollar having gained 3.54% against the Japanese currency since the start of the year.
Although the Bank of Japan raised interest rates to their highest level in 31 years last month, analysts said renewed selling pressure on the Yen emerged this week amid concerns that the central bank may still be lagging behind inflation.
Those worries were reinforced by the BOJ’s latest Tankan survey, which indicated that businesses expect inflation to continue rising, fuelling speculation that policymakers may need to tighten monetary policy more aggressively.
Elsewhere, the Australian Dollar traded at $0.6894 against the US Dollar, while the New Zealand kiwi edged 0.1% higher to $0.5677.