Dollar Awaits Key Data, Yen Near 38-Year Low

The yen recovered slightly against the dollar after falling to its weakest level since 1986 on Wednesday. The European Commission will release consumer and business sentiment data during the European session. The U.S. economic calendar will include revised first-quarter gross domestic product (GDP), weekly jobless claims, durable goods orders and May existing home sales data. Later in the day, the market focus will turn to the first U.S. presidential debate between Joe Biden and Donald Trump.

Following a weak performance at the beginning of the week, the USD/JPY gathered bullish momentum and climbed to its highest level since 1986 above 160.80 on Wednesday. Verbal intervention by Japanese government officials helped the yen rebound early Thursday, pushing USD/JPY below 160.50. Both Chief Cabinet Secretary Hayashi and Finance Minister Shunichi Suzuki did not comment on the level of foreign exchange rates, but said they were watching the developments in the currency market with a sense of urgency and reiterated their readiness to take necessary actions. Meanwhile, data released earlier in the day showed that Japan’s retail sales grew 3% year-on-year in May, beating market expectations and April’s 2% growth.

The dollar index climbed above 106.00 on Wednesday, hitting its highest level since early May. The index remained in a consolidation phase and fluctuated slightly below this level in early European trading on Thursday. Meanwhile, U.S. stock index futures traded in negative territory, while the benchmark 10-year U.S. Treasury yield remained stable above 4.3% after rising nearly 2% on Wednesday.

EUR/USD closed lower for the second consecutive day on Wednesday. The pair rebounded slightly early Thursday, but remained just below 1.0700.

GBP/USD extended its losses amid renewed strength in the U.S. dollar, falling 0.5% on Wednesday. The pair moved higher to 1.2650 at the start of Thursday’s European session.

Gold fell to its lowest level in more than two weeks on Wednesday, below $2,300, pressured by rising U.S. Treasury yields. Gold/USD has corrected back and is trading around $2,300 in early European trading.

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