The USD held steady near an eight-week low, with global financial markets keenly awaiting this Friday's crucial U.S. jobs report. Analysts expect the report to shed light on possible Federal Reserve interest rate cuts. Simultaneously, the euro kept its gains after the ECB cut rates, despite persistent inflation concerns that cloud future monetary policies.
In early Asian trading, the USD index, which measures the dollar against six major currencies including the euro, remained stable at 104.13. This level is just above this week's low of 103.99, the first time it has fallen below 104 since April.
Market analysts believe the subdued USD index reflects expectations of dovish monetary policies, after a series of disappointing macroeconomic indicators. These conditions have led traders to speculate about potential Fed rate cuts later this year, possibly starting in September.
Joseph Capurso, head of international economics at Commonwealth Bank of Australia, emphasized the expected outcomes of the non-farm payrolls report. "We anticipate the report will reveal sustained job market strength, though growth may have slowed. This could push back the anticipated rate cuts, potentially boosting the USD."
Meanwhile, the euro stayed steady at $1.0889 following the ECB’s rate reduction. This move marks the start of an easing cycle aimed at tackling persistent inflation, expected to remain above the bank's 2% target until next year. The sterling also remained stable, close to its highest level since mid-March.
As global markets look for more monetary policy clues, the USD has shown slight gains against the yen, trading at 155.85, but it's still set to close the week nearly 1% down.
Explore USD trends as it stabilizes near an 8-week low. See how upcoming economic reports could sway Fed decisions.
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