The dollar hovered near a seven-week low on Thursday while the euro and British pound drifted slightly lower against it, as traders weighed easing Middle East tensions against looming U.S. jobs data. A joint Japan-U.S. currency intervention and a drop in oil prices also factored into the session.
Major currencies held rangebound on Thursday, with the Dollar Spot Index holding virtually flat, nursing a 0.1% gain after touching its lowest level since mid-June in the prior session. The euro and British pound drifted slightly lower, while Asian currencies, including the Japanese yen, Chinese yuan and Indian rupee, traded within narrow bands as investors hesitated to take bold directional bets.
Dollar Consolidates After a Volatile Summer
The quiet session reflects a broader consolidation across global currency markets following a volatile summer. Foreign exchange desks have spent recent weeks navigating a mix of geopolitical shocks in the Persian Gulf, coordinated central bank currency interventions, and recalibrated rate-cut expectations across major central banks.
Yen Intervention Pulls Currency Back From 40-Year Lows
Recent volatility was headlined by a joint intervention from Japanese and U.S. monetary authorities, the first such collaborative action since 1998. The move pulled the yen back from 40-year lows near 162 per dollar. U.S. Treasury Secretary Scott Bessent said Washington would do "whatever it takes" to support Tokyo's stabilization efforts. The yen has since stabilized around 157.7 per dollar, though traders remain hesitant to push it higher while Bank of Japan policy-rate expectations stay gradual.
Falling Oil Prices Lift Asian Currencies
The geopolitical risk premium embedded in energy-sensitive currencies has begun to unwind. Reports say Iran and Oman reached a preliminary understanding over shipping coordinates in the Strait of Hormuz, the choke point for a fifth of global petroleum. That agreement triggered an 8% drop in Brent crude over recent sessions.
Lower oil prices have offered relief to net energy importers across Asia and Europe, lifting currencies such as the Indian rupee. The rupee extended its recovery toward 95.20 per dollar. The Reserve Bank of India kept its benchmark repo rate unchanged at 5.25%, while also trimming its inflation forecast.
US Jobs Data in Focus
Currency markets are now turning to U.S. employment data, starting with Thursday's weekly initial jobless claims. Friday's nonfarm payrolls report follows next. Interest-rate futures price roughly a 48% chance of a 25-basis-point Federal Reserve rate hike in September, and traders are watching for signs of labor-market cooling that could cap dollar strength heading into the autumn.
Source: Investing.com
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