Dollar holds losses on US economy concerns, Fed appointments

New Straits Times

8 hours ago

TOKYO: The dollar remained lower against major peers on Thursday, as expectations of Federal Reserve rate cuts grew and concerns swirled about partisanship creeping into key US institutions.
Initial jobless claims in the United States are under scrutiny after last week's disappointing nonfarm payrolls, which triggered a slide in the greenback. Meanwhile, the euro found support ahead of anticipated talks next week to end the war between Russia and Ukraine.
Last week, President Donald Trump fired the official responsible for the labour data he did not like, and focus is centring on his nomination to fill a coming vacancy on the Fed's Board of Governors and candidates for the next chair of the central bank.
"All those things suggest that we're seeing those political risks around the US dollar increase, and on top of that you've got the weak data coming through," said Tony Sycamore, a market analyst at IG.
Any progress in ending the war in Ukraine "is going to be a positive driver of the euro," he added.
The dollar index, which measures the greenback against a basket of major peers, edged up 0.1 per cent to 98.259 in early trade in Asia, after a 0.6 per cent slide in the previous session.
The US currency was little changed at 147.36 yen. The euro stood at US$1.1654, down almost 0.1 per cent after a 0.7 per cent jump previously.
The US Labor Department is expected to report that initial claims for unemployment benefits likely rose by 3,000 to 221,000 for the week ended August 2. Continued jobless claims for the week that ended July 26 are expected to increase slightly.
Data last Friday showed US employment growth was weaker than expected in July while the nonfarm payrolls count for the prior two months was revised down considerably, suggesting a sharp deterioration in labour market conditions.
Fed funds futures traders are now pricing in a 94 per cent probability of a 25 basis point cut at the Fed's September meeting, up from 48 per cent a week ago, according to the CME Group's FedWatch Tool. In total, traders see 60.5 basis points in cuts this year.
Trump could meet Russian leader Vladimir Putin as soon as next week, a White House official said on Wednesday, as the US kept up pressure on Moscow to end the war in Ukraine.
The president said on Tuesday he would decide on a nominee to replace outgoing Fed Governor Adriana Kugler by the end of the week and had separately narrowed the possible replacements for Fed Chair Jerome Powell to a short list of four.
Sterling was steady at US$1.33505. The Australian dollar was little changed at US$0.65.
Bitcoin edged 0.1 per cent lower to US$115,038.79.