Dollar Steady Amid Fed Rate Cut Speculation

The dollar remained steady on Friday and could end a two-week losing streak, buoyed by U.S. labor and manufacturing data. The yen wobbled at 157.24 per dollar following suspected market interventions, while Japan's core consumer prices accelerated. The Federal Reserve's next meeting, scheduled for the end of July, has traders speculating on potential rate changes.

The dollar was steady on Friday, set to break a two-week losing streak as U.S. labor and manufacturing data influenced traders' expectations on Federal Reserve rate cuts this year.

The yen fluctuated at 157.24 per dollar after reaching a six-week high of 155.375 on Thursday, following suspected interventions by the Bank of Japan, which could total nearly 6 trillion yen. Japan's core consumer prices rose for the second consecutive month in June, raising market expectations of a near-future rate hike.

The BOJ exited negative rates and bond yield control in March, signaling a shift from a decade-long radical stimulus program. Expectations are growing for a rate hike in the BOJ's end-of-month meeting, with traders pricing in a 41% chance of a 10 basis point hike. On the U.S. side, initial unemployment claims rose more than expected last week, without a significant impact on the labor market.

The dollar index, which measures the U.S. currency against six rivals, stood at 104.21, up from a four-month low of 103.64 hit on Wednesday. The index is poised for a 0.16% gain for the week after two consecutive weeks of losses. The Federal Reserve will meet at the end of July, with a low probability of rate cuts but a potential 25 basis points easing by September.

Ryan Brandham of Validus Risk Management noted that the U.S. economy is nearing conditions suitable for a rate cut, albeit with caution to avoid reigniting inflation. Fed officials emphasized the need for more confidence in reaching the 2% inflation target before considering rate cuts.

In other currencies, the euro remained little changed at $1.0893, and sterling was flat at 1.2942 after recent drops. The Australian and New Zealand dollars also saw slight declines.

(With inputs from agencies.)