Dollar struggles to find footing on rising bets of outsized Fed cut

Renewed concerns over U.S. economy growth outlook boost expectations of supersized rate cut from Federal Reserve.

The dollar stayed on the back foot on Thursday as renewed concerns over the U.S. economy's growth outlook bolstered expectations of a supersized rate cut from the Federal Reserve this month.

The yen was a notable outperformer, in part due to safe-haven demand, but also on the view that imminent rate hikes from the Bank of Japan against the tide of a global easing cycle would lift the Japanese currency due to narrowing interest rate differentials.

The yen was last 0.26% higher at 143.36 per dollar, having risen to a one-month high of 143.20 earlier in the session. For the week thus far, it is up 1.8%.

Global markets have been on edge and stocks, in particular, have been badly bruised after softer-than-expected U.S. data this week reignited concerns that the growth outlook of the world's largest economy was less rosy than earlier thought and the labour market could be slowing more sharply than expected.

"The markets are getting anxious," said Hemant Mishr, chief investment officer at S CUBE Capital in Singapore.

"There was a time when the markets were just focusing on positive news. There's a perceptible change, the market is now focusing on negative news and rationalising a sell-off."

Data released on Wednesday showed U.S. job openings dropped to a 3-1/2-year low in July, suggesting the labor market was losing steam, with the figures coming after Tuesday's ISM manufacturing survey which remained in contraction territory.