Market Jitters Rise as U.S. Growth Concerns Spur Federal Reserve Rate Cut Expectations

The dollar weakened amid renewed concerns over the U.S. economy's growth outlook, boosting expectations of a significant Federal Reserve rate cut. This has led to increased market volatility and a stronger yen. Investors are closely watching labor market data, with a keen focus on Friday's nonfarm payrolls report.

The dollar has weakened as renewed concerns over the U.S. economy's growth outlook have heightened expectations of a significant rate cut from the Federal Reserve this month. The yen has emerged as a notable performer, benefiting from safe-haven demand and potential rate hikes from the Bank of Japan.

The yen was last 0.26% higher at 143.36 per dollar, reaching a one-month high of 143.20 earlier. This week, it has risen by 1.8%. Meanwhile, global markets remain tense, particularly in the stock sector, following softer-than-expected U.S. data that reignited worries about the country's growth and labor market health.

"The markets are getting anxious," said Hemant Mishr, chief investment officer at S CUBE Capital in Singapore. "The focus has shifted from positive news to rationalizing negative reports and a sell-off." Recent data revealed U.S. job openings fell to a 3-1/2-year low in July, further indicating a cooling labor market, which has significant implications for Federal Reserve policy moving forward.

(With inputs from agencies.)