The euro held steady at $1.0929, near a four-month high hit on Wednesday, ahead of a meeting expected to leave interest rates unchanged and with focus on whether European Central Bank policymakers will back market bets on a rate cut in September.
“We expect the ECB to stress that future rate cuts will be contingent on further declines in inflation and wage growth,” said Joe Capurso of the Commonwealth Bank of Australia.
“The risk is that the chances of a cut in September will shrink,” he added.
The Australian dollar made limited gains, trading at 0.6738 against the greenback, while sterling fell slightly to below $1.30 after UK data showed the unemployment rate held steady and wage growth slowed in May.
The yen continued its sharp rise against the dollar, recording 155.37 against the dollar in the first hours of the mostly limited trading session in Asia today, Thursday, before settling around 156.35, down five yen from a week ago.
Money market data linked to the Bank of Japan suggest authorities may have bought about 6 trillion yen ($38.37 billion) last week, and traders said this week’s moves bore the hallmarks of more intervention, or at least markets being easily spooked by the prospect.
FedWatch indicates that investors are betting on more than 60 basis points of cuts in US interest rates this year and on a 20 basis point increase in Japanese interest rates.
Analysts also pointed to the market turmoil caused by comments by US presidential candidate Donald Trump, who described the strength of the dollar and the weakness of the yen and yuan as a major problem in an interview with Bloomberg Businessweek.
So far this year, the yen is the worst performing G10 currency against the dollar, having lost more than 9 percent, while the yuan has fallen about 2.2 percent.
The Chinese yuan rose slightly as traders awaited news of a key leadership meeting in Beijing expected to conclude later in the day. The yen was last trading at 7.2576 per dollar.
The New Zealand dollar jumped and settled around $0.6071.
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