Dollar holds steady ahead of U.S. jobs data as yen intervention risks rise

TOKYO: The dollar was little changed on Thursday as investors awaited U.S. non-farm payrolls data, while the yen’s fall to a 40-year low kept markets alert for possible intervention by Japanese authorities.

The dollar index, which tracks the greenback against a basket of currencies including the yen and euro, slipped 0.02% to 101.38.

Economists polled by Reuters expect Thursday’s data to show that U.S. employers added 110,000 jobs in June, while the unemployment rate is forecast to remain unchanged at 4.3%.

Federal Reserve Chairman Kevin Warsh said on Wednesday that inflation expectations and price risks had eased in recent weeks.

The ADP National Employment Report also showed private employment rose less than expected.

Akihiko Yokoo, senior analyst at Mitsubishi UFJ Bank, said stronger-than-expected payrolls could push the dollar higher again.

The dollar has been supported by rising expectations of Federal Reserve rate hikes this year, as a resilient labour market has strengthened the outlook for U.S. growth.

U.S. job gains have exceeded expectations for the past three months, adding to support from capital inflows into U.S. assets linked to rapid adoption of artificial intelligence.

The euro traded at $1.138 against the dollar, while sterling rose 0.06% to $1.3279.

The yen remained under pressure, after falling overnight to 162.84 per dollar, its weakest level in 40 years. In early trading, it was little changed at 162.50 per dollar.

The slide has placed Japan’s Ministry of Finance under renewed pressure to decide whether to intervene in support of the currency.

Traders said Friday’s U.S. public holiday could provide a window for intervention, as thinner liquidity may amplify the impact of any move by Tokyo.

Tony Sycamore, market analyst at IG Australia, said the U.S. jobs report could act as a trigger, depending on the result.

He said a strong jobs reading could encourage investors to add to dollar-yen positions and push the pair towards the 165-166 range.

He added that a weaker report, such as payroll growth of around 65,000 and unemployment rising to 4.4% or higher, could reduce pressure on the yen’s recent decline.

In that case, Sycamore said Japan’s finance ministry could use thin pre-holiday trading to make any intervention more effective.

The Australian dollar fell 0.09% to $0.6885, while the New Zealand dollar traded at $0.5672.

In cryptocurrencies, bitcoin declined 0.2% to $59,934.94, while ether fell 0.7% to $1,605.88.