The U.S. dollar steadied near multi-week lows Thursday, ahead of the release of more economic data which should confirm a Federal Reserve rate cut next month.
At 04:05 ET (08:05 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 97.709, just above than the two-week low seen in the prior session.
Dollar on backfoot The U.S. currency has been on the backfoot for most of August after the release of disappointing jobs numbers, but the selloff received another boost earlier this week with the reporting of benign consumer prices growth for July.
This suggested that President Donald Trump’s tariffs have yet to add to price pressures in a significant way, allowing the Federal Reserve to concentrate more on signs of a cooling labor market.
Traders are now pricing in a 99% probability of a 25-bps interest rate cut at the September Fed meeting, according to Investing.com’s Fed Rate Monitor Tool.
U.S. Treasury Secretary Scott Bessent added to the speculation when he said he thought an aggressive half-point cut was possible given recent weak employment numbers.
“Markets aren’t pricing in anything over 25bp for now, and a 50bp option would probably not be taken seriously unless there are some hints in that direction at the Jackson Hole symposium, or August jobs data hugely disappoints again,” said analysts at ING, in a note. Fed Chair Jerome Powell is expected to speak at the symposium in Wyoming next week, and he used this forum last year to point to coming rate cuts.
Ahead of this, traders will focus on the July producer price index, looking for any signs that tariff-related bumps in prices are gathering steam, while the weekly jobless claims data will provide more information about the strength of the labor market.
Eurozone GDP data due In Europe, EUR/USD slipped 0.2% to 1.1680, just below Wednesday’s peak of $1.1730, a level last seen on July 28.
Second-quarter growth figures for the eurozone are due for release later in the session, and are expected to show meager 0.1% growth in the second quarter, a hefty slowdown from the 0.6% growth seen in the first three months of the year.
“EUR/USD is approaching tomorrow’s U.S.-Russia summit with good momentum, and the option market does not seem to be pricing in major volatility risk. One-week EUR/USD implied volatility is at the bottom of its recent range and in line with historical volatility,” said ING.
GBP/USD traded marginally higher at 1.3572, after data released earlier in the session showed that Britain’s economy grew by a faster-than-expected 0.3% in the second quarter of 2025, but this still represented a slowdown from the growth of 0.7% in the first three months of the year.
The Bank of England had forecast 0.1% growth in gross domestic product for the April-June period.
