The dollar edged up on Thursday, but stayed close to recent lows, as traders weighed receding trade war risks and looked ahead to Friday's key U.S. data, while sterling dipped ahead of the Bank of England's policy decision.

The yen touched an eight-week top versus the U.S. dollar after a Bank of Japan policy board member advocated continued interest rate hikes, but pared the gains and was broadly flat in European trade.

The dollar rose against a basket of peers to 108, but still hovered near the lowest level since the start of last week, with investors beginning to entertain prospects that a global trade war could be averted.

The dollar index hit a two-year high of 110.17 on January 13, but has since retreated 2%.

U.S. President Donald Trump suspended planned tariff measures against Mexico and Canada this week, but imposed additional 10% levies on imports from China.

In the absence of tariff headlines, markets looked ahead to Friday's key U.S. monthly payrolls figures, the next major test for the U.S. monetary policy outlook.

A quarter-point Fed cut is fully priced for July, with markets expecting a total of 45 basis points of reductions by the December meeting, according to LSEG data.

U.S. Treasury Secretary Scott Bessent said on Wednesday that while Trump wants lower interest rates, he will not ask the Federal Reserve to cut rates.

The pound retreated 0.55% from a one-month high to $1.2437, with the Bank of England widely expected to cut rates by a quarter point later in the day.

Market-implied odds for an imminent BoE rate reduction stand at around 94%.

The euro edged down 0.4% to $1.0361.

The yen strengthened as far as 151.81 per dollar - the strongest level since December 12 - in the Tokyo morning, after the BOJ's Naoki Tamura said the central bank must raise rates to at least 1% or so in the latter half of fiscal 2025 with upward risks to prices rising.

Japan's currency was last changing hands at 152.65 per dollar, largely unchanged on the previous day, paring the early gains after Tamura clarified that he didn't mean that the neutral rate should be 1%.

The market is currently pricing in a quarter-point BOJ rate hike by September.

Sumber : Reuters