Dollar steady

The dollar held tight ranges on Thursday as markets awaited key US jobs data for clues on the rates outlook, while the yen’s slide to 40-year lows against the greenback and thin trade ahead of a US holiday kept traders on high alert for intervention.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, eased just 0.1 percent to 101.32.

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Thursday’s data is expected to show US employers added 110,000 jobs in June, with the unemployment rate holding steady at 4.3 percent, according to the median estimate of economists polled by Reuters. Federal Reserve Chair Kevin Warsh said on Wednesday inflation expectations and price risks have eased in recent weeks, while the ADP National Employment Report showed private employment rose less than expected.

“If the payrolls data exceed market expectations, the dollar could accelerate higher on a rebound,” said Mitsubishi UFJ Bank senior analyst Akihiko Yokoo in a note.

The dollar has been underpinned by rising expectations of Fed rate hikes this year. A resilient labour market has also bolstered the US growth outlook, after jobs gains exceeded expectations for the past three months. That added to other sources of dollar support, including the rapid adoption of AI, which has helped draw capital into US assets.

The euro traded at $1.135 against the US dollar while sterling gained 0.13 percent to $1.3288.

Meanwhile, the Japanese yen gained 0.23 percent against the greenback to 162.18 per dollar, having hit a fresh 40-year low of 162.84 on Wednesday. The yen has been one of the biggest casualties of the dollar’s strength, with the greenback up 3.54 percent against the Japanese currency year to date.

Although the Bank of Japan raised interest rates to a 31-year high last month, analysts said selling pressure on the yen had picked up again this week on concerns the BOJ may be falling behind the curve, partly after the bank’s Tankan survey suggested companies’ inflation expectations could rise further.