Market News
Dollar Holds Steady Ahead of U.S. Jobs Report; Yen Remains Near 40-Year Low - REUTERS
By Satoshi Sugiyama
TOKYO, July 2 (Reuters) — The U.S. dollar traded within a narrow range on Thursday as investors awaited the release of key U.S. employment data that could provide fresh guidance on the Federal Reserve's interest rate outlook.
At the same time, the Japanese yen remained close to its weakest level in 40 years against the dollar, keeping traders on alert for possible intervention by Japanese authorities. Trading volumes were also subdued ahead of the U.S. Independence Day holiday.
Markets Await Key U.S. Employment Data
Investor attention is focused on the U.S. June non-farm payrolls report, one of the most closely watched indicators of the health of the American economy.
Economists surveyed by Reuters expect:
- Non-farm payrolls: An increase of 110,000 jobs in June.
- Unemployment rate: Steady at 4.3>#/strong###.
The employment report is expected to play a key role in shaping expectations for future Federal Reserve interest rate decisions.
Dollar Holds Near Recent Highs
The U.S. Dollar Index (DXY), which measures the greenback against a basket of major currencies, edged 0.1% lower to 101.32, remaining close to its recent 13-month high.
The dollar has been supported by:
- Expectations of additional Federal Reserve rate hikes.
- A resilient U.S. labour market.
- Strong economic growth.
- Continued capital inflows into U.S. assets, partly driven by rapid investment in artificial intelligence (AI).
Federal Reserve Chair Kevin Warsh said on Wednesday that inflation expectations and broader price pressures have eased in recent weeks.
Meanwhile, the latest ADP National Employment Report showed private-sector hiring slowed more than expected, increasing market focus on the official payrolls figures.
"If the payrolls data exceed market expectations, the dollar could accelerate higher on a rebound," said Akihiko Yokoo, Senior Analyst at Mitsubishi UFJ Bank.
Euro and Sterling
The euro traded around $1.1350, while sterling rose 0.13>#/strong### to $1.3288.
Both currencies remained under pressure from expectations that U.S. interest rates could remain elevated for longer.
Yen Near Four-Decade Low
The Japanese yen strengthened modestly by 0.23>#/strong### to 162.18 per dollar, after falling to a fresh 40-year low of 162.84 in the previous session.
Despite the slight recovery, the yen remains one of the weakest major currencies this year, with the dollar gaining 3.5>#/strong### against it since the beginning of 2026.
The currency's weakness continues to fuel speculation that Japanese authorities could intervene in the foreign exchange market if depreciation accelerates further.
BOJ Faces Pressure to Tighten Policy
Although the Bank of Japan (BOJ) raised interest rates to their highest level in 31 years last month, analysts believe the central bank may still be lagging behind rising inflation.
The BOJ's latest Tankan business survey indicated that companies expect inflation to remain elevated, increasing the likelihood of further price and wage increases.
