HG MARKETS:

The U.S. dollar edged lower on Thursday, consolidating after a sharp rebound overnight as market participants awaited additional speeches from key Federal Reserve policymakers. The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.1% to 100.56, following a nearly 0.6% surge on Wednesday its largest one-day gain since June 7.

Several Federal Reserve officials are scheduled to speak later Thursday, and traders will be watching closely for further insights, as messaging since the last Fed meeting has appeared somewhat mixed. Fed Governor Adriana Kugler expressed strong support for the decision to cut rates by half a percentage point to initiate the easing cycle. In contrast, Fed Governor Michelle Bowman warned against aggressive rate cuts, and Atlanta Fed President Raphael Bostic noted that the central bank does not need to hasten rate reductions. Fed Chair Jerome Powell will deliver pre-recorded opening remarks, and other speakers include Collins, Bowman, Williams, Barr, Cook, and Kashkari. Thursday’s economic data calendar is also busy, with the second-quarter GDP print, weekly jobless claims, and August’s durable goods orders all due for release.

The PCE Price Index the Federal Reserve’s preferred measure of inflation is set for release on Friday and is expected to influence the central bank’s upcoming policy decisions. Preceding this, a revised estimate of second-quarter Gross Domestic Product (GDP) and the latest weekly jobless claims data are scheduled for release on Thursday.

In Europe, EUR/USD edged up slightly to 1.1132 after retreating sharply from 1.1214, its highest level since July of last year, with the Eurozone’s data calendar remaining relatively quiet. GBP/USD gained 0.1% to 1.3342, after reaching 1.3430 on Wednesday, a level not seen since February 2022. USD/CHF dropped 0.2% to 0.8488 after the Swiss National Bank cut its benchmark interest rate by 25 basis points earlier Thursday. While this move was widely anticipated and marked the third consecutive cut, some market participants had expected a larger reduction, given Switzerland’s inflation rate was at 1.1% last month the slowest among G10 economies and near the midpoint of the SNB’s target range of 0%-2%.

USD/JPY rose 0.1% to 144.87, moving further from its 2024 lows ahead of Friday’s Liberal Democratic Party elections, which will determine Japan’s next Prime Minister. Analysts predict a leadership change could delay the Bank of Japan’s plans to raise interest rates in the near term.