Dollar Dips Amid Fed Rate Cut Expectations

The dollar fell to a one-month low against the yen and faced pressure from other currencies as concerns about the U.S. economic outlook grew. This situation underscores expectations of a significant Federal Reserve rate cut. Global markets are volatile, awaiting crucial U.S. employment data.

The dollar dropped to a one-month low against the yen and struggled against other major currencies on Thursday, reflecting growing concerns over the U.S. economic outlook and increased expectations of a significant rate cut from the Federal Reserve next week.

The yen hit a one-month high due to safe-haven demand and speculation of rate hikes from the Bank of Japan, as other central banks look to cut rates. Nervous global markets and weaker-than-expected U.S. data have raised concerns about the growth outlook and a potentially slowing labor market.

Expectations are high for Friday's pivotal U.S. nonfarm payrolls report, with various economic readings potentially stirring market volatility, according to City Index's market strategist Fiona Cincotta. Options market data shows traders are bracing for significant currency moves, with volatility reaching peaks not seen since the March 2023 banking crisis for the euro and at its highest in a year for the yen.

(With inputs from agencies.)