Dollar holds losses on US economy concerns, Fed appointments
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 U.S. 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% to 98.259 in early trade in Asia, after a 0.6% slide in the previous session.
The U.S. currency was little changed at 147.36 yen. The euro stood at $1.1654, down almost 0.1% after a 0.7% jump previously.
The U.S. 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 U.S. 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% probability of a 25 basis point cut at the Fed's September meeting, up from 48% 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 U.S. 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 $1.33505. The Australian dollar was little changed at $0.65.
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