The dollar index dropped 0.10% to 100.84, following a 0.57% gain on Wednesday, its biggest one-day rise since June 7
The dollar held firm on Thursday following its sharpest rally since early June as traders looked ahead to speeches from Fed policymakers later in the day for clues on the pace of interest rate cuts.
The U.S. currency rebounded strongly overnight from a more than one-year low to the euro and 2 1/2-year low versus sterling.
Later on Thursday, Fed Chair Jerome Powell gives pre-recorded remarks at a conference in New York, where New York Fed President John Williams will also speak.
Weekly U.S. jobless claims data will be closely scrutinised later on Thursday, given the Fed’s shift in focus to employment over inflation.
To the extent that dramatic Fed labour market weakening is going to be an implicit part of what’s needed to support market pricing for at least one more 50 basis cut this year, it is the best high-frequency indicator we have on that, NAB’s Crompton said.
Traders still expect a second super-sized 50 bp rate cut at the Federal Reserve’s next meeting in November, but the odds declined to 57.4% from 58.2% a day earlier, shows the CME Group’s FedWatch Tool.
The dollar index dropped 0.10% to 100.84 as of 0444 GMT, following a 0.57% gain on Wednesday, its biggest one-day rise since June 7.
The euro was little changed at $1.1143, after retreating sharply from $1.1214, a level not seen since July 2023.
Sterling was flat at $1.33425. On Wednesday it jumped to $1.3430 for the first time since February 2022.
The yen reached a three-week low of 145.04 per dollar and last fetched 144.77.
Minutes from the BoJ’s July meeting, when the central bank hiked short-term interest rates, showed policymakers were divided on how quickly the central bank should raise rates further.
The Australian dollar gained 0.37% to $0.6848 after Wednesday’s sharp decline from a 19-month high of $0.6908.
The Chinese yuan edged up to 7.0149 per dollar in offshore trading after it retreated on Wednesday from its highest since May of last year at 6.9952.
