Forex Today: Dollar starts September on a firm footing

Here is what you need to know on Thursday, September 1:

Following Wednesday's volatile trading amid month-end flows, the greenback gathered strength early Thursday with the US Dollar Index rising above 109.00. Although the dollar lost some interest after the data from the US showed that employment in the private sector grew at a much softer pace than expected in August, the risk-averse market helped the currency find demand. July Unemployment Rate data from the euro area will be looked upon for fresh impetus later in the session. The US economic docket will feature weekly Initial Jobless Claims, second-quarter Unit Labor Costs data and the ISM's Manufacturing PMI survey for August.

US ISM Manufacturing PMI Preview: Slowing growth or recession?

Wall Street's main indexes suffered heavy losses on Wednesday and US stock index futures are down between 0.4% and 1.2% in the European morning on Thursday, suggesting that safe-haven flows continue to dominate the market action. Meanwhile, Shanghai Composite lost 0.5% despite the fact that China’s cabinet said that Beijing will publish detailed steps for a set of newly-announced policy measures in early September.

After the data from the euro area showed that the annual Harmonised Index of Consumer Prices (HICP) rose to 9.1% from 8.9% in July, the shared currency managed to stay resilient against the dollar and EUR/USD closed the day at its highest level since mid-August. According to Reuters eurozone money markets now price in roughly an 80% chance of 75 basis points ECB rate hike next week, compared to just over 50% earlier in the week. Despite hawkish ECB bets, EUR/USD trades in negative territory below 1.0050 early Thursday.

GBP/USD extended its slide and touched its weakest level in over two years below 1.16000 on Thursday. The British pound struggles to find demand amid risk aversion and renewed interest in the euro.

USD/JPY surged to fresh multi-decade highs above 139.50 during the Asian trading hours but retreated toward 139.00 in the European morning. The benchmark 10-year US Treasury bond yield gained nearly 3% on Wednesday and climbed above 3.2% for the first time in two months, fueling USD/JPY's rally.

Pressured by rising US yields, gold registered large losses for the second straight day on Wednesday and was last seen trading in negative territory below $1,710.

Bitcoin is having a difficult time making a decisive move in either direction and continues to trade in a narrow channel at around $20,000. Ethereum climbed above $1,600 on Wednesday but erased a large portion of its daily gains in the second half of the day. ETH/USD was last seen losing more than 1% on the day at $1,530.