Dollar Slips on Weak Data

4 Jul 2024 , 09:24 AM

The dollar fell on Thursday after U.S. economic data continued to show slowing growth, but that provided no comfort to the yen, which was trapped around a 38-year low, keeping the market on edge for government intervention.

The euro stayed close to a three-week high against the dollar, as sterling strengthened ahead of the UK elections later in the day.

The dollar index, which measures the greenback against a basket of peer currencies, was unchanged at 105.28 after briefly falling to its lowest level since June 13 at 105.04 on Wednesday.

Softer-than-expected U.S. economic statistics on Wednesday, including a negative services report and an ADP employment survey, showed a slowing economy, despite an increase in first claims for unemployment benefits last week.

The focus now shifts to the widely awaited nonfarm payrolls report due on Friday, which is projected to show a 190,000 job growth in June following 272,000 in May, according to a Reuters survey of economists.

Ahead of the jobs report, the market priced in a 68% possibility of a rate cut in the United States in September, up from 56% a week ago, according to the CME FedWatch tool.

U.S. Treasury yields also dipped on Wednesday.

Despite the dip in both the dollar and yield levels, the yen remained close to the previous session’s low of 161.96 per dollar, its lowest since December 1986.

Traders were bracing for a possible Japanese government currency intervention with U.S. markets off for the July Fourth vacation, after Tokyo intervened on April 29 and May 1 amid illiquid moments in the global trading day or holiday-thinning activity.

During the two waves of significant yen buying, Japan spent 9.79 trillion yen ($61.31 billion) to defend the currency.

Sterling was trading at $1.2744, up 0.03% on the day, as it held its footing ahead of UK elections.

Britain is expected to pick Labour Party leader Keir Starmer as its next prime minister when voters go to the polls on Thursday, ousting Rishi Sunak’s Conservatives after 14 often stormy years in rule.

The euro was up 0.04% at $1.079, after reaching a three-week high versus the dollar on Wednesday.

Bitcoin recently increased 1.41% to $60,376.65.

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