Dollar Holds Steady as US Payrolls Loom, Yen Sinks to 40-Year Low Sparks Intervention Concerns

TOKYO – The dollar remained largely unchanged on Thursday as investors positioned for key U.S. non-farm payrolls data, while the yen approached 40-year lows against the greenback, raising expectations of Japanese government intervention to prop up the currency amid thin trading conditions ahead of a U.S. holiday.

The dollar index, which tracks the greenback against a basket of major currencies including the yen and euro, edged down 0.02% to 101.38.

Market participants awaited June jobs data expected to show U.S. employers added 110,000 positions with the unemployment rate holding at 4.3%, according to the median forecast from Reuters poll of economists. Federal Reserve Chairman Kevin Warsh noted Wednesday that inflation expectations and price risks have eased in recent weeks, while the ADP National Employment Report showed moderation in private sector job growth.

Dollar strength has been supported by expectations for Federal Reserve rate hikes this year, bolstered by resilient labor market data that has reinforced optimism about U.S. economic growth. These factors have added to broader dollar support, including strong artificial intelligence adoption that has drawn capital into U.S. assets.

The euro traded at $1.138 against the dollar, while the British pound rose 0.06% to $1.3279.

The yen came under intense pressure, hitting 162.84 per dollar overnight, its weakest level since 1980, surpassing recent intervention levels that prompted Japanese authorities to step in previously. Early trading showed modest recovery at 162.50 per dollar.

Traders viewed Friday’s U.S. Independence Day holiday as a potential window for Japanese intervention, with thinner liquidity likely to amplify any currency support measures. Market momentum could shift based on payrolls results, with stronger-than-expected data potentially pushing the dollar toward 165-166 yen areas.

Conversely, softer jobs figures around 65,000 additions with unemployment rising to 4.4% or higher could reduce pressure on Japan to intervene, potentially allowing finance ministry action during thin pre-holiday trading for maximum impact.

The Australian dollar slipped 0.09% against the dollar to $0.6885, while the New Zealand dollar traded at $0.5672.

In cryptocurrency markets, bitcoin fell 0.2% to $59,934.94, and ether declined 0.7% to $1,605.88.

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