The dollar firmed after a sharp recovery as Fed speakers watched by Reuters

By Kevin Buckland

TOKYO (Reuters) – The dollar held firm on Thursday after its strongest rise since early June as traders looked to speeches by key Federal Reserve policymakers later in the day for clues on the pace the reduction of interest rates.

The US currency rebounded strongly overnight from a more than one-year low against the euro and a 2½-year low against the pound.

While there was no obvious catalyst for the rebound, investors appeared to have a more nuanced view of how aggressive future U.S. interest rate hikes would be, with Fed speakers this week failing to present a unified view of the way forward.

On Wednesday, Fed Governor Adriana Kugler said she “strongly supports” the decision to cut rates by half a point earlier this month to kick-start the easing cycle, but stopped short of her preferences for the pace of cuts here.

Earlier this week, Chicago Fed President Austan Goolsbee said policymakers “cannot be behind the curve” if the economy is to have a soft landing. Atlanta Fed President Raphael Bostic said the central bank doesn’t need to go on a “crazy whore” to cut interest rates.

“I don’t get the sense at the moment that it’s particularly unanimous,” said Kenneth Crompton, chief rates strategist at National Australia Bank (OTC:).

“It feels like they’ve been able to catch up … and from here it’s probably more 25 years than 50 years.”

Later Thursday, Fed Chairman Jerome Powell delivered pre-recorded remarks at a conference in New York, which also featured New York Fed President John Williams. Boston Fed President Susan Collins and Fed Governors Michelle Bowman and Lisa Cook also take the podium at various other locations.

Weekly US jobless claims data will be closely watched later Thursday as the Fed’s focus shifts to employment over inflation.

“To the extent that the Fed’s dramatic easing of the labor market will be an implicit part of what is needed to support market prices for at least an additional 50 basis points this year, it is the best indicator of high frequency that we have in this regard,” NAB’s Crompton. said.

Traders still expect a second rate cut of 50 basis points at the Fed’s next meeting in November, but odds fell to 57.4% from 58.2% a day earlier, according to the Group’s FedWatch tool CME (NASDAQ:).

which measures the currency against the euro, sterling, yen and three other major peers, fell 0.07 percent to 100.87 at 0034 GMT, after rising 0.57 percent on Wednesday, the biggest gain of a day from June 7.

The euro was little changed at $1.1135 after pulling back sharply from $1.1214, a high not seen since last July.

Sterling was flat at $1.3322. On Wednesday, it climbed to $1.3430 for the first time since February 2022.

The yen strengthened about 0.15% to 144.57 per dollar, down from a three-week low of 144.845 touched in the previous session.

Minutes from the Bank of Japan’s July meeting, when the central bank raised short-term interest rates, showed policymakers are split on how quickly the central bank should raise interest rates.

The Australian dollar added 0.15% to $0.68335, finding its feet after Wednesday’s sharp retreat from a 19-month peak of $0.6908.

The value was steady at 7.0284 per dollar in offshore trading, having fallen from a high of 6.9952 since May last year on Wednesday.

The Swiss franc was little changed at 0.8499 per dollar ahead of the central bank’s policy announcement on Thursday, with a third consecutive quarter-point rate cut expected.

In cryptocurrencies, bitcoin fell 0.8% to $62,915.