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Market Analysis

US Dollar Pauses Ahead of Jobs Data Release
Amos Simanungkalit · 14K Views

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On Thursday, the dollar remained relatively stable following comments from Federal Reserve Chair Jerome Powell that were interpreted as supportive of potential interest rate cuts this year. 


Traders awaited the latest U.S. labor market data while also reacting to a surprise slowdown in U.S. services growth, which further fueled expectations of rate cuts and weighed on the dollar. Despite this, the dollar has been the strongest performer among G10 currencies so far this year, albeit with more modest expectations compared to three months ago.

 

The yen, facing the risk of official intervention, saw little change, hovering around the same level it has maintained for the past three weeks. The euro, which rose overnight, returned to a familiar range against the dollar, driven partly by softer-than-expected European inflation figures that reinforced expectations of a rate cut in June.


Powell's remarks, emphasizing the importance of economic data in decision-making, were seen as affirming the likelihood of rate cuts this year. 


Analysts anticipate a possible rate cut by July, with futures pricing indicating a 60% probability of a cut in June. Meanwhile, the Australian dollar surpassed its 200-day moving average amid a dip in the U.S. dollar and remained stable. Expectations of rate cuts in New Zealand and steady rates in Australia until November have influenced currency movements, with the New Zealand dollar rising against the greenback.


Chinese markets were closed for a holiday, while the U.S. dollar index, despite a strong performance earlier in the year, has slightly retreated as expectations for significant U.S. rate cuts have decreased. U.S. Treasury yields, which rose earlier in the week, saw a slight decline overnight.

 

Later in the day, market focus will turn to PMI readings in Europe and the European Central Bank meeting from last month. The main highlight for the week remains the U.S. labor data scheduled for release on Friday.

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.

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