Investing.com – The US dollar stabilized on Thursday after falling sharply overnight after Fed Chairman Jerome Powell ruled out rate hikes, while the Japanese yen was volatile amid intervention talks.
At 06:00 ET (10:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% higher at 105.645, after rising 0.6 overnight. % to have decreased.
Powell rules out further rate hikes
The ECB kept interest rates unchanged at the end of its latest policy-setting meeting on Wednesday, as widely expected, with the Fed chairman acknowledging that fighting inflation was taking longer than expected.
However, he largely ruled out rate hikes this year, which surprised dollar bulls given recent stronger-than-expected inflation data.
“While the committee added an aggressive acknowledgment of the ‘lack of further progress’ on inflation so far this year to its statement, Chairman Powell delivered a soothing message at his news conference,” Goldman Sachs economists said in a statement. note.
“We have left our forecast unchanged and continue to expect two rate cuts this year, in July and November,” she added.
Economic data will now be scrutinized even more closely as Powell emphasized the need to be data-dependent, and will be released weekly later in the session.
However, the first major data point arrives on Friday, with the closely watched US employment report.
are expected to have risen by 243,000 in April, down from just over 300,000 the month before, but still indicative of a healthy labor market.
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Eurozone production is still weak
In Europe, trading was 0.1% lower at 1.0699 after data showed the eurozone manufacturing sector remains in the doldrums.
The latest Eurozone estimate, compiled by S&P Global, fell from 46.1 in March to 45.7 in April, below the 50 mark, indicating activity growth for a 22nd month.
The bloc’s economy recovered from a mild recession last quarter, expanding 0.3% quarter on quarter in January-March, official data showed earlier this week, but further growth from the manufacturing sector in the region will come.
traded 0.1% lower at 1.2509, trading in a tight range, with the next major economic data release being Friday’s.
This is expected to rise to 54.9 in April, compared to 53.1 the month before, indicating that the UK’s dominant services sector remains in a healthy state, potentially providing room for the Bank of England to postpone interest rate cuts.
Yen volatile; more intervention at work?
In Asia, it rose 0.5% to 155.26, with the pair recovering somewhat after suddenly falling more than 3% on Wednesday from late Tuesday levels, sparking talks of more intervention by Japanese authorities to support the yen.
The USDJPY pair was down from 160 on Monday, which traders said was the new line in the sand for Japan when it came to yen weakness. But the factors weighing on the yen – especially a dovish Bank of Japan and a large spread between local and US interest rates – are expected to continue to play a role, limiting the effect of government intervention.
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Broader Asian currencies moved in a flat-to-low range, with the pair rising 0.1% to 0.6531, while data showed the country shrank to a more than three-year low in March.
