Investing.com – The U.S. dollar was slightly higher on Thursday, while the euro fell ahead of a European Central Bank meeting and sterling fell as wage growth in the U.K. slowed.
At 04:00 ET (09:00 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 103.550, rebounding from losses this week amid growing optimism that the Federal Reserve will cut interest rates in September.
The dollar is rising
The dollar rose on Thursday after falling to its lowest level since March in the previous session.
Confidence that the US Federal Reserve will start cutting interest rates at its next meeting in September, to support the slowing economy, has greatly affected the dollar.
Economic data due later in the session is likely to show an increase in weekly growth, while the consumer price index is set to point to a slight improvement in conditions.
Sterling falls as wage growth slows
Sterling fell 0.2% against the US dollar to 1.2985, after data showed UK wage growth slowed in May, but remained at high levels.
The data showed growth excluding bonuses – a key gauge of inflationary pressures for the Bank of England as it considers whether to cut interest rates next month – grew by 5.7% in the three months to May, compared with a year earlier.
This represents a decrease from 6.0% the previous month, which has led financial markets to raise the probability of a rate cut next month to 39.1% from 30%.
The next meeting will be in early August.
The euro fell 0.1 percent against the US dollar to 1.0928, retreating slightly from a four-month high hit on Wednesday ahead of a European Central Bank policy-setting meeting later in the session.
The central bank is widely expected to keep interest rates on hold, after cutting them in June, so much attention will be focused on the ECB president’s comments at the accompanying press conference.
“Our team concludes that the ECB is probably happy with current market pricing for another 25bp rate cut in September and December and would prefer not to move the needle today,” analysts at ING said in a note.
Yen regains some ground
In Asia, the index rose 0.2% to 156.47 after falling to 155.38 earlier.
The sharp rise in the yen, which saw the pair fall from around 162 over the past week, has sparked growing speculation that the Japanese government has once again intervened in currency markets.
The pound was slightly lower at 7.2586, with the pair holding below eight-month highs.
Sentiment toward China soured after a Bloomberg report said the United States was considering tougher restrictions on China’s technology and chip industries — a move that could anger Beijing and spark a renewed trade war between the world’s largest economies.
