Investing.com – The U.S. dollar steadied on Thursday after falling sharply overnight following Federal Reserve Chairman Jerome Powell ruling out any rate hikes, while the Japanese yen was volatile amid talk of intervention.
At 06:00 EST (10:00 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 105.645, after falling 0.6% overnight.
Powell rules out further raising interest rates
The Federal Reserve kept interest rates unchanged at the conclusion of its latest policy-setting meeting on Wednesday, as was widely expected, with the Fed chair admitting that fighting inflation is taking longer than expected.
However, he largely ruled out raising interest rates this year, which surprised dollar bulls in light of recent stronger-than-expected inflation data.
“While the committee added a dour acknowledgment of 'no further progress' on inflation so far this year to its statement, Chairman Powell delivered a downbeat message in his press conference,” Goldman Sachs economists said in a note.
“We have left our forecasts unchanged and continue to expect two rate cuts this year in July and November,” they added.
Economic data will be closely studied now, with Powell stressing the need to be data-driven, and there are weekly data scheduled for release later in the session.
However, the first major data point will arrive on Friday, with the closely watched US employment report.
The number of jobs is expected to rise by 243,000 in April, down from just over 300,000 the previous month, but still an indicator of a healthy labor market.
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Eurozone manufacturing remains weak
In Europe, trading fell by 0.1% to 1.0699, after data showed that the manufacturing sector in the euro zone is still in recession.
The euro zone final, compiled by S&P Global, fell to 45.7 in April from 46.1 in March, below the 50 mark that indicates activity growth for the 22nd month.
Official data showed earlier in the week that the bloc's economy recovered last quarter from a slight slump and expanded 0.3% quarter-on-quarter in the January-March period, but any additional growth is unlikely to come from the region's manufacturing sector anytime soon. close.
It fell 0.1% to 1.2509, trading in a narrow range, with the next economic data due on Friday.
This is expected to show an increase to 54.9 in April, from 53.1 the previous month, suggesting that the UK's dominant services industry remains healthy, which could provide the Bank of England with room to delay interest rate cuts.
The yen is volatile; More interference at work?
In Asia, it rose 0.5% to 155.26, as the pair made something of a recovery after suddenly falling more than 3% on Wednesday from late Tuesday levels, prompting talk of further intervention by Japanese authorities to support the yen.
The USDJPY pair fell from the 160 level on Monday, which traders said was the new line in the sand for Japan when it comes to a weak yen. But the factors affecting the yen – led by a dovish Bank of Japan and the wide gap between domestic and US interest rates – are expected to remain influential, limiting the impact 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 even after data showed the country contracted to the lowest level in more than three years in March.
