The US Dollar Index (DXY), which measures the value of the US dollar (USD) against six major currencies, held steady after dropping more than 0.5% in the previous session. The DXY traded around 98.20 during the Asian session on Thursday (August 7th). Weekly US Initial Jobless Claims are likely to be monitored later in the North American session.

Traders are awaiting further developments surrounding the next US Federal Reserve (Fed) Chair. US President Donald Trump announced on Tuesday that he will name a Fed Chair and Kugler's replacement by the end of the week. Trump is considering White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh, and two other candidates for the top Fed post. He confirmed that Treasury Secretary Scott Bessent is not his choice for Fed Chair.

The US dollar faced challenges as a weaker-than-expected US Nonfarm Payrolls (NFP) report for July indicated a cooling labor market and raised expectations that the US Federal Reserve (Fed) would cut interest rates by 25 basis points in September. Markets had priced in a nearly 95% probability of a 25 basis point (bps) rate cut at its September meeting, up from 48% a week ago, according to the CME FedWatch tool.

Federal Reserve Bank of San Francisco President Mary Daly said on Wednesday that the Fed still has some work to do in its efforts to address inflationary pressures despite overall progress. Daly emphasized that the Fed may be forced to act quickly without a complete picture.

Furthermore, Boston Fed President Susan Collins and Fed Board of Governors member Lisa Cook warned that persistent uncertainty remains a major obstacle to effective policy transmission and challenges the central bank's ability to manage interest rates efficiently. (alg)

Source: FXstreet