Asian session review: US dollar is showing negative dynamics

During today's Asian trading, the US dollar declined moderately against major currencies, extending recent losses and approaching the 13-month low reached last week.

The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.22% to 100.89. Since the beginning of the week, the index has decreased by 0.83% amid mixed data on the US labor market. Investors are also cautious ahead of the release of the key employment report (12:30 GMT), which may affect the extent of the Fed's monetary policy easing in September. According to forecasts, the nonfarm payrolls rose by 160 thousand in August after an increase of 114 thousand in July, the unemployment rate fell to 4.2% from 4.3%, and annual wage growth accelerated to 3.7% from 3.6%. If the data exceeds forecasts, this will increase the likelihood of a small Fed rate cut - by 25 basis points - in September. On the contrary, weaker indicators will become an argument for a more aggressive Fed rate cut. According to the CME FedWatch Tool, markets see a 43% probability of a 0.5% rate cut in September (up from 30% the week before), and a 57% probability of a 0.25% rate cut (down from 70% the week before), with a 1% rate cut expected by the end of the year.

The yen rose 0.75% against the US dollar, reaching its highest level since August 5. The yen is supported by the widespread weakness of the US currency, falling yields on US Treasury bonds, as well as expectations of further interest rate hikes by the Bank of Japan.