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The U.S. dollar edged lower on Thursday as traders awaited more speeches from key Federal Reserve policymakers, following a sharp rally in the previous session. The Dollar Index, which measures the greenback against a basket of six other currencies, was down 0.1% to 100.565 as of 04:40 ET (08:40 GMT). This slight dip comes after a 0.6% jump on Wednesday, the largest one-day gain since June 7.
The dollar’s movement reflects traders’ ongoing assessment of how aggressively the Federal Reserve will continue to cut interest rates. Earlier this month, the Fed initiated its rate-cutting cycle with a substantial 50 basis point reduction. Traders are now looking for further guidance from several Fed officials scheduled to speak on Thursday.
Fed Governor Adriana Kugler supported the initial half-point cut, but differing views from officials like Governor Michelle Bowman and Atlanta Fed President Raphael Bostic have introduced some uncertainty regarding the pace of future rate cuts.
In addition to the Fed speeches, key economic data such as the latest second-quarter GDP figures, weekly jobless claims, and August’s durable goods orders will be in focus.
Euro and Pound Maintain Elevated Levels
The euro (EUR/USD) traded slightly higher at 1.1132, retreating from Wednesday’s peak of 1.1214, a level not seen since July of last year. In contrast, the British pound (GBP/USD) edged up by 0.1% to 1.3342, after reaching 1.3430, its highest level since February 2022.
The USD/CHF pair fell 0.2% to 0.8488 after the Swiss National Bank (SNB) announced a 25 basis point cut to its benchmark interest rate earlier in the day. While the move was anticipated, some market participants had hoped for a larger reduction, given Switzerland’s inflation rate of 1.1% in August—the lowest among G10 economies and well within the SNB’s target range of 0%-2%.
The Chinese yuan (USD/CNY) strengthened, trading 0.2% lower to 7.0187, near its lowest level since May 2023. This move follows Beijing’s announcement of major stimulus measures designed to support economic growth.
Yen Holds Steady Ahead of Japanese Elections
The Japanese yen (USD/JPY) edged up by 0.1% to 144.87, moving further from its 2024 lows ahead of Friday’s LDP elections, which will determine Japan’s next Prime Minister. Analysts expect the outcome to impact the Bank of Japan’s plans for any potential interest rate hikes in the near term.
The U.S. dollar’s trajectory remains closely tied to Federal Reserve signals and upcoming economic data. The mixed expectations among Fed officials have kept traders on edge, and the next few days will be crucial in determining the dollar’s short-term direction, especially as other major currencies respond to local economic events and central bank actions.
