US Dollar extends decline as NFP takes centre stage
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, slides below 99.00 to its lowest level in over a week on Thursday. At the time of writing, DXY trades around 98.90, down 0.67% on the day, after reaching 99.86 on Wednesday.
The US Dollar Index (DXY) slipped below 99.00, reaching its lowest level in over a week, trading around 98.90 on Thursday. This decline was driven by a sharp rally in the Japanese Yen (JPY), which pushed USD/JPY lower for a second consecutive day. The Yen's rapid move has led to speculation of possible Japanese intervention, though no confirmation has been given.
A moderate dip in US Treasury yields also contributed to the dollar's decline. Less hawkish remarks from Federal Reserve Governor Christopher Waller prompted traders to reduce bets on a rate hike at the upcoming September meeting. The probability of a rate increase has dropped to around 50%, down from 63% a day earlier. Economic data from Thursday received limited attention, as initial jobless claims rose slightly above expectations and the ISM Services PMI exceeded market forecasts.
The US economy is projected to add 58K jobs in August, with the unemployment rate expected to stay at 4.1%. Market participants will closely monitor wage growth and revisions to previous payroll data. Nonfarm Payrolls, a key component of the monthly jobs report, measures the change in the number of employed people in the US, excluding farming.
The figure can influence Federal Reserve decisions on interest rates, as higher NFP often supports the US Dollar.
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