USD depreciated against most of its major rivals in the European session on Thursday as investors waited for more U.S. economic data that could provide clues about the Federal Reserve's interest rate path.
The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, decreased 0.16% from the previous close to 101.20.
Later in the day, investors will receive another set of data on the U.S. labour market in the form of ADP's private-sector payrolls report for August (12:15 GMT) and Labour Department’s weekly jobless claims (12:30 GMT) as well as ISM’s services sector survey for August (14:00 GMT).
Today’s data will follow Tuesday’s report, which showed a continuing contraction in the U.S. manufacturing sector in August, and Wednesday’s JOLTS report, which revealed that job openings decreased to 7.673 mln in July, the lowest level since early 2021, prompting markets to increase their bets that the U.S. central bank would start its policy easing next month with a more aggressive interest rate cut. According to the CME FedWatch, markets now see a 43.0% probability of a 50-basis-point rate decrease at the Fed’s September 17-18 meeting, up from 34.0% a week ago.
However, the most influential publication of the week - the U.S. August employment situation report - will come on Friday. Economists expect the report will show that non-farm payrolls rose by 165,000 last month, following a 114,000 gain in July, an employment rate fell to 4.2% from 4.3% in July, and annual wage growth accelerated to 3.7% from 3.6% in July.
If the U.S. labour market figures come in weaker than expected, this will increase the likelihood of the steep rate reduction by the U.S. central bank in September.