The U.S. dollar held near multi-week lows on Thursday as market participants awaited economic data expected to support a Federal Reserve rate cut next month.
At 04:05 ET (08:05 GMT), the Dollar Index, which tracks the greenback against six major currencies, rose 0.1% to 97.709, slightly above the two-week low seen in the previous session.
Dollar under pressure
The U.S. dollar has been weak for most of August following disappointing employment numbers. Selling intensified earlier this week after July’s consumer prices grew only modestly, signaling that President Donald Trump’s tariffs had yet to significantly impact inflation. This allows the Fed to focus on labor market trends.
Traders now see a 99% probability of a 25-basis-point cut at the September Fed meeting, according to Investing.com’s Fed Rate Monitor Tool.
U.S. Treasury Secretary Scott Bessent added to speculation by suggesting a half-point rate cut could be possible if weak employment numbers persist.
“Markets aren’t pricing in anything over 25bp for now, and a 50bp option would probably not be taken seriously unless there are some hints in that direction at the Jackson Hole symposium, or August jobs data hugely disappoints again,” ING analysts said.
Fed Chair Jerome Powell is expected to speak at next week’s Wyoming symposium, a forum he used last year to signal upcoming rate cuts. Ahead of this, investors are watching July’s producer price index and weekly jobless claims for further labor market insight.
Eurozone growth awaited
EUR/USD slipped 0.2% to 1.1680, just below Wednesday’s peak of $1.1730, last seen on July 28.
Second-quarter eurozone GDP figures are due later Thursday and are expected to show just 0.1% growth, down from 0.6% in Q1.
“EUR/USD is approaching tomorrow’s U.S.-Russia summit with good momentum, and the option market does not seem to be pricing in major volatility risk. One-week EUR/USD implied volatility is at the bottom of its recent range and in line with historical volatility,” ING said.
GBP/USD inched up to 1.3572 after U.K. data revealed a 0.3% growth rate in Q2 2025, surpassing expectations but slower than Q1’s 0.7%. The Bank of England had forecast 0.1% GDP growth.
“It’s positive news for the gilt market ahead of the Autumn fiscal event, but it doesn’t change the narrative for the Bank of England at this moment (inflation and jobs markets are the two main inputs), hence the reaction in sterling has been muted,” ING added.
Yen strengthens on BOJ speculation
USD/JPY fell 0.7% to 146.43 as the yen gained amid speculation about a possible Bank of Japan rate hike. This followed U.S. Treasury Secretary Scott Bessent’s warning that the BOJ was lagging in addressing inflation.
BOJ Governor Kazuo Ueda, however, dismissed concerns about delays in rate increases to curb persistent inflation.
USD/CNY declined slightly to 7.1721, extending earlier losses after the U.S. and China agreed to extend their trade truce by 90 days. Key Chinese economic indicators, including industrial production and retail sales, are due Friday.
AUD/USD dropped 0.2% to 0.6536 after July labor data came in slightly below expectations, reinforcing the idea that Australia’s labor market is cooling and pointing toward potential future rate cuts by the Reserve Bank of Australia.
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