Currency markets exhibited a lack of direction on Thursday, as the Japanese yen pulled back from gains attributed to intervention, while the dollar moved away from a six-week low. Investors remained attentive to forthcoming details regarding a proposed U.S.-Iran deal and anticipated Friday’s U.S. jobs report. The yen exhibited a slight depreciation, trading at 157.85 per dollar after experiencing modest declines in the preceding two sessions. It has now retraced some intervention-induced gains after reaching 155.20 per dollar on Monday, yet it remains significantly above a multi-decade low of nearly 164 attained in July. “Stretched positioning, the involvement of the U.S. ​and the fact that the yen is historically undervalued all suggest that the current round of intervention has a better chance ​of propping up the yen for longer than some previous ones,” said Jonas Goltermann.

The euro declined approximately 0.1% to $1.1542, while sterling experienced a comparable decrease to $1.3460. The dollar index, which tracks the U.S. currency against six major peers, was up 0.1% at 99.77, edging higher after it hit a six-week low on Monday. Markets maintained a vigilant stance as tensions persisted in the Gulf, following a Reuters report indicating that a proposed agreement between Iran and Oman aimed at resolving the U.S.-Iran conflict might grant Tehran authority over inbound traffic through the Strait of Hormuz. However, there was no immediate response from the U.S. regarding the proposal. President Donald Trump has indicated that an agreement to reopen the strait is on the horizon; however, U.S. officials have consistently maintained that they will not concede control of access to this critical trade route for energy supplies to Iran. Brent crude inched higher to around $80.20 a barrel, although prices remain well below the almost $100 per barrel hit in July when tensions between Iran and the U.S. flared. “We ‌haven’t got ⁠the oil market volatility that has really been the key driver of most markets in recent days and weeks,” Ray Attrill said.

Investors are increasingly directing their attention towards U.S. payroll data, which may offer further insights into the trajectory of the Federal Reserve’s interest rate policy. This comes on the heels of data indicating that the services sector maintained its strength in July, despite a deceleration in services-sector employment. A divided Fed left rates unchanged last month, but Chair Kevin Warsh delivered an unwavering commitment to bring inflation lower, leaving the door open to a possible rate hike in September. “Any data release after the Fed meeting in July is just very important,” said Francesco Pesole. “Tomorrow’s ​payrolls could be pretty big for dollar-yen. If it’s a hot print then you would probably start to ​see a new ⁠build up of speculative longs on dollar-yen.”

A survey predicts that July’s employment report will reveal a nonfarm payroll increase of 80,000 jobs, following a rise of 57,000 in June. The unemployment rate is forecast to hold steady at 4.2%. Fed Governor Lisa Cook stated on Wednesday that she is receptive to the notion that the central bank may need to elevate its short-term interest rate target in response to “too high” levels of inflation in the U.S. economy. San Francisco Fed President Mary Daly expressed her full support for the recent decision to maintain interest rates at their current levels, emphasising that additional data is required prior to the upcoming meeting in September.