Asian session review: US dollar is showing a slight decline

During today's Asian trading, the US dollar fell slightly against major currencies, continuing yesterday's decline caused by an increased likelihood of significant easing of the Fed's monetary policy at the September meeting.

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 0.14% to 101.22. Yesterday, the index fell by 0.43%, as data showed that in July the number of vacancies fell to a 3.5-year low, signaling that the labor market is losing momentum and is no longer a source of inflationary pressure on the economy. Recently, investors have been attaching increased importance to any data related to the health of the US labor market, given the Fed's focus on protecting it. Now, according to the CME FedWatch Tool, markets see a 45% probability of a 0.5% rate cut in September (up from 34% the week before), and a 55% probability of a 0.25% rate cut (down from 66% the week before), with a 1% rate cut expected by the end of the year. However, these expectations may change again against the background of new data on the US labor market: the ADP employment report for August, as well as the initial jobless claims report for last week, will be published today, and the nonfarm payrolls report for August will be presented tomorrow. 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%.

The yen rose 0.4% against the US dollar, reaching a one-month high, helped by increased demand for safe haven assets and a view that further interest rate hikes by the Bank of Japan will support the Japanese currency as its interest rate differential with other global economies narrows. Since the beginning of the week, the yen has risen 2.1% against the US dollar.