European session review: USD slips as more U.S. jobs data and Fed speeches looms

USD weakened against most of its major counterparts in the European session on Thursday as investors waited for more reports on the U.S. labour market and the speeches from the Federal Reserve officials over the coming days, which could prompt another recalibration of markers’ rate cut expectations.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, fell 0.14% from the previous close to 104.10.

Later in the day, investors will receive the latest weekly statistics on jobless claims in the U.S. These data will be followed by Friday’s release of the crucial employment situation report for March. Economists expected the report will show that employment continued to rise in March, albeit at a softer pace than in the previous month - by 200,000 versus 275,000 in February, while wage growth moderated to 4.1% YoY from 4.3% YoY in February.

In addition, investors will monitor the comments from several Fed representatives, including Philadelphia Fed president Harker, Richmond Fed president Barkin and Minneapolis Fed president Kashkari, which might shed more light on the policymakers’ views on the U.S. economic outlook and monetary policy prospects.

In recent days, markets had trimmed their rate-cut forecasts amid signs of economic strength, sticky inflation and a more cautious tone from the Fed rate-setters. According to the CME Fed WatchTool, markets currently see a 58.5% probability of a rate reduction at the Fed’s June meeting versus 60.4% a week ago.

The chairman of the U.S. central bank Jerome Powell reiterated yesterday that rate decreases are likely to be appropriate at some point this year but stressed that the incoming data should guide policy decisions.