Dollar index falls as traders weigh Fed rate path
Investing.com — The dollar dipped in European trade on Thursday, as markets remained on edge before key U.S. labor data, while the yen appreciated as Bank of Japan Governor Kazuo Ueda offered more cues on a potential pivot away from the central bank’s ultra-dovish stance.
At 06:42 ET (11:42 GMT), the U.S. dollar index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower at 103.94.
«The underlying dollar story [...] will be determined, by tomorrow's US jobs report and next week's [Federal Open Market Committee] meeting,» analysts at ING said in a note.
While the Fed is widely projected to keep interest rates on hold in December, markets have been unsure when the U.S. central bank plans to begin trimming borrowing costs. The uncertainty has aided the dollar, even as private employment data pointed to more cooling in the labor market.
The closely-watched nonfarm payrolls report due on Friday is expected to provide definitive clues about the jobs picture in the world's largest economy, and will likely factor into the trajectory of the dollar for the remainder of the year.
Yen in focus in Asia
The yen was the best performer in Asia for the day, strengthening by 1.6% against the greenback after Ueda flagged more challenges for the BOJ in the coming months, and also spoke about options the bank has when considering a move away from negative interest rates.
His comments reinforced expectations that the BOJ will wind down its ultra-dovish, stimulus-heavy policies in the coming year. But the unclear timing of the pivot kept traders wary.
Gains in the yen were still held back by Ueda stressing the need for loose policy in the near-term, especially amid signs that the Japanese economy was
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