TOKYO- The dollar was on the back foot on Thursday after US economic data continued to point to slowing growth, offering limited relief to the yen, which remained pinned near a 38-year low that had the market on alert for government intervention.
The euro and sterling both consolidated off three-week highs against the greenback, as voters hit the polls in the UK later in the day and investors awaited a second round of voting in France on Sunday.
The dollar index which measures the greenback against a basket of peer currencies, was close to flat at 105.32 after briefly weakening to its lowest since June 13 at 105.04 on Wednesday.
Softer-than-expected US economic data on Wednesday, including a weak services report and ADP employment report, depicted a slowing economy, following an increase in initial applications for unemployment benefits last week.
“Slowly but surely, what we’re starting to see is a bit of a turn in the US economic data flow,” said Rodrigo Catril, senior currency strategist at National Australia Bank (NAB).
Minutes of the Fed’s June meeting acknowledged the US economy appeared to be slowing and “price pressures were diminishing.”
The string of weaker economic data had markets pricing in about a 68 percent chance of a US rate cut in September versus 56 percent a week ago, according to the CME FedWatch tool.
The dollar’s drop helped a battered yen edge 0.12 percent higher versus the greenback to 161.53.
Traders also appeared to be adjusting positions ahead of Friday’s closely watched US nonfarm payrolls report, said Marito Ueda, general manager of the market research department at SBI Liquidity Market.
