Dollar Dips as Rate Cut Speculation Rises

The dollar weakened on Thursday as traders anticipated a significant rate cut from the Federal Reserve. Concerns over U.S. economic growth and labor market conditions drove investors to seek safe-haven currencies like the yen and Swiss franc. Global markets remain volatile, with focus on upcoming U.S. job data.

The dollar weakened on Thursday, driven by traders' mounting expectations for a significant rate cut from the Federal Reserve later this month. The yen outperformed on safe-haven demand as concerns about U.S. economic growth re-emerged.

Global markets have been volatile, particularly in stocks, after weaker-than-expected U.S. data this week rekindled fears that the growth outlook is dimmer than previously thought. Investors are moving away from risky assets, with the yen seeing notable gains. The Japanese currency rose 0.26% to 143.56 per dollar, accumulating nearly 2% gains for the week. The Swiss franc also steadied at 0.8461 per dollar.

"Markets are feeling anxious," stated Hemant Mishr, chief investment officer at S CUBE Capital in Singapore. Recent data revealed U.S. job openings hit a three-and-a-half-year low in July, indicating a slowing labor market, complemented by a contraction in the ISM manufacturing survey. The Fed's focus on the labor market's health has kept the U.S. dollar weak, with the euro stable at $1.1083 and sterling at $1.3147. Traders now forecast a 44% chance of a 50-basis-point rate cut. The focus is on the upcoming nonfarm payrolls report, with anticipated job additions and a slight dip in the unemployment rate.

(With inputs from agencies.)