Dollar wavers on economic slowdown, yen near 38-year low

The dollar came under pressure due to US economic data indicating slowing growth on Thursday, offering slight relief to the yen, which hovered near a 38-year low and increased the chances of government intervention.

The dollar index remained almost flat at 105.32 after dipping to its lowest point since June 13 at 105.04 on Wednesday.

Weak US economic indicators, including a disappointing services report and the ADP employment report, indicated a slowing economy, which followed an increase in initial unemployment claims last week. This has led markets to price in a 68 per cent chance of a US rate cut in September, up from 56 per cent the previous week, according to the CME FedWatch tool.

Despite these conditions, the yen edged up 0.12 per cent against the dollar to 161.53, though it remained close to the previous session’s low of 161.96, a level not seen since December 1986. Traders are bracing for potential intervention by the Japanese government, with US markets closed for the Fourth of July holiday.

In Europe, the euro and sterling held steady after consolidating from three-week highs against the dollar. The euro was 0.02 per cent lower at $1.0784, off its peak since June 12. Sterling, buoyed by expectations of a Labour Party victory in the UK elections, was trading at $1.2739.

Bitcoin fell 1.2 per cent to $58,820.78, having hit a two-month low of $57,843 earlier in the session. Ether dropped to $3,172.60, its lowest since May 20, and was last down 0.8 per cent at $3,228.88.

Attribution: Reuters.