Dollar takes a breather ahead of US jobs data
dollar was pinned beneath recent peaks on Thursday with traders taking remarks from Federal Reserve Chair Jerome Powell as reassuring on the likelihood of interest rate cuts this year while waiting for the latest U.S. labour market readout.
An unexpected slowdown in U.S. services growth also supported cut expectations and weighed on the dollar, though for the year so far it remains the best-performing G10 currency as those expectations are far more modest than three months ago.
The yen, which has been frozen lately by the risk of official intervention, hardly enjoyed much relief either, and at 151.56 was more or less where it has been for three weeks.
The euro, up 0.6% overnight, was back to the middle of a range it has kept for a year at $1.0837. European inflation came in softer-than-expected on Wednesday, reinforcing expectations for a European rate cut in June.
Jerome Powell made balanced remarks noting policymakers will be guided by economic data. Traders focused on his view that recent figures had not changed his broad outlook, and his reminder that «most FOMC participants see it as likely to be appropriate to begin lowering the policy rate at some point this year.»
«The speech broadly affirmed the Fed is on track to cut rates this year, with data determining the timing. We think by July, the (Fed) will likely have sufficient confidence to begin cutting rates,» said analysts at ANZ.
Futures pricing was broadly steady and implied markets see about a 60% probability of a Fed cut in June.
The Australian
