Investing.com – The U.S. dollar was steady on Friday, trading near a one-month high after stronger-than-expected U.S. jobless claims eased fears of an impending recession in the world’s largest economy.
At 04:15 ET (09:15 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was largely unchanged at 103.007, not far from levels seen before Friday’s labor market data.
Dollar steadies after volatile week
Initial claims for state unemployment benefits fell by 17,000 to a seasonally adjusted 233,000 in the week ended Aug. 3, the biggest drop in about 11 months, data showed on Thursday.
This helped calm fears that the US economy was heading for a hard landing and that the Federal Reserve was behind the curve by deciding not to cut interest rates late last month.
“The unusually large reaction to yesterday’s jobless claims numbers was a testament to the markets’ extremely high sensitivity to all sorts of indicators of the US macroeconomic outlook at the moment,” analysts at ING said in a research note.
All eyes will be on the latest consumer price release next week, as traders look for more guidance on the Federal Reserve’s potential future actions.
“We can reasonably expect the market reaction to next week’s US core numbers to be large even for small deviations (second decimal point) from the consensus of 0.2% m/m,” ING added.
According to the CME Group (NASDAQ:) FedWatch tool, the odds of the US Federal Reserve cutting interest rates by 50 basis points at its next monetary policy meeting are now above 50%, with a 25 basis point cut now at a 46% chance.
Italian consumer prices fell in July
In Europe, the pound fell slightly to 1.0917, after rising to 1.1009 for the first time since January 2 at the start of the week.
The central bank began cutting interest rates in June, and many expect policymakers to agree to another cut in September.
Eurozone consumer prices fell 0.9% month-on-month in July and were up 1.6% from a year earlier, suggesting inflationary pressures were limited in the eurozone’s third-largest economy.
The pound rose 0.2% against the US dollar to 1.2768, extending a 0.5% rise overnight that pulled it from its lowest level in more than a month.
However, gold remained on track to post small losses this week, which would be the fourth straight week of declines.
USD/JPY is trading above lows.
In Asia, the index fell 0.1% to 147.20, but was trading well above its lows of around 141.60 hit earlier in the week.
The yen’s shift came after Bank of Japan officials said they would not raise interest rates during market volatility, softening the hawkish message the central bank delivered at a meeting in late July.
But despite this week’s weakness, the yen has still enjoyed impressive gains against the dollar over the past month, especially as the global carry trade has begun to ease.
The yuan fell slightly to 7.1739, as the yuan received support from data showing that China’s economy grew more than expected in July, while inflation fell slightly less than expected.