Dollar weakens as US job openings decline; Yen gains on safe-haven appeal

Dollar dips on jobs: The Dollar experienced a decline against most major currencies on Wednesday, following data showing a decrease in US job openings for July. This drop indicates a potential softening in the labour market, raising expectations for more significant interest rate cuts by the Federal Reserve.

Market participants are increasingly anticipating a 0.50per cent rate cut by the Fed at its next meeting, driven by the news that job openings in July fell to their lowest level in three and a half years.

The upcoming US payrolls report on Friday could provide further insights into the timing and extent of potential Fed rate cuts.

Atlanta Federal Reserve President Raphael Bostic stressed the need for the central bank to avoid maintaining high interest rates for too long, to prevent negative impacts on employment.

The Dollar index, which tracks the US currency against six major peers, fell 0.3per cent to 101.4. The Dollar also dropped 1per cent to 144.07 yen, marking a one-week low, as global financial markets leaned towards safer assets.

US stocks continued to struggle after a sharp decline on Tuesday, triggered by concerns over the US economy and tech sector valuations.

Manufacturing weakens outlook

Weaker US manufacturing data released on Tuesday has heightened fears of a potential economic downturn.

After a significant 2per cent drop against a basket of currencies in August, the Dollar has stabilised, as increased market volatility has driven demand for safer currencies.

Marc Chandler, chief market strategist at Bannockburn Global Forex, noted that "stock market instability and falling US yields have strengthened the yen."

The Dollar index remains about 1per cent above its late August low of 100.51.

Brad Bechtel, global head of FX at Jefferies, suggested that "the USD has rebounded but is hesitant to rise further until more information is available. After Friday's report, the DXY could be either at 100 or lower or at 104 or higher."

Economists expect Friday's report to show an increase of 165,000 US jobs in August, following a rise of 114,000 in July.

Jobless claims under review

Investors are also watching jobless claims data scheduled for Thursday.

The Euro edged up 0.2per cent to $1.107075, recovering from early losses. Although Eurozone business activity received a temporary boost from the recent Olympic Games in France, a return to weaker demand is expected after the Paralympics conclude.

The Canadian Dollar appreciated 0.3per cent against the US Dollar after the Bank of Canada reduced its key policy rate by 25 basis points to 4.25per cent but expressed concerns that weaker-than-expected growth might lead to a too-rapid fall in inflation.

Sterling rose 0.2per cent to $1.3138, recovering from an overnight low of $1.3101.

In the cryptocurrency market, Bitcoin fell about 1per cent to $57,751, and the ether declined approximately 0.8per cent to $2,444, as investors shunned riskier assets.

(With Reuters Inputs)