The U.S. currency fell against the yen as investors assessed data showing weakness in the labor market as well as a slight rebound in consumer prices.
He global dollar retreated slightly from its 10-week high against the yen and a nearly two-month high, as investors assessed data that showed weakness in the labor market, as well as a slight rebound in the inflation, which suggests that the Federal Reserve (Fed) will likely continue to cut interest rates.
He dollar index —which measures the performance of the greenback in comparison with a basket of six other internationally relevant currencies— fell 0.07% after the publication of the consumer price index (CPI) of September. It fell to 102.86 from a nearly two-month high hit overnight, as traders further reduced bets on rate cuts in the United States this year after last week’s unexpectedly strong payrolls data.
The dollar fell 0.38% to 148.66 yen after rising as high as 149.58 yen for the first time since August 2. The latest comments from the deputy governor of the Bank of Japan, Ryozo Himino, supporting further rate hikes if the economy moves in line with the bank’s projections, had helped keep the dollar slightly weaker against the yen.
Meanwhile, the euro fell to its lowest level since August 8 against the dollar and fell 0.14% on the day to $1.0925.
US inflation, key
The projection of the specialists pointed to a core inflation of the United States to remain stable at a year-on-year rate of 2.3%, said economists surveyed by Reuters.
However, the CPI registered a price increase of 0.2% monthly and 2.4% in the year-on-year comparison. Although it was the smallest year-on-year increase since February 2021, the figures exceeded the 0.1% and 2.3% expected by analysts surveyed by Reuters. Furthermore, excluding the volatile components of food and energy, the CPI rose 0.3% in September, again slightly above expectations.
The minutes of the last meeting of the Fed, released overnight, confirmed the central bank’s focus on keeping the labor market healthy. “The argument in favor of a more gradualist approach is now definitely the central position,” he explained in that sense Alvin Tan, head of currency strategy for Asia in RBC Capital Markets. “Market momentum is to reconsider how much it will actually cut the Federal Reserve in the coming months. “I think that momentum can grow, because the flow of data from the United States has been relatively good recently,” he added.
In parallel, the operators put an 85% probability that the Fed cut rates by 25 basis points in its next policy decision on Nov. 7, with a 15% chance of no change, the tool showed FedWatch of the CME Group. A week earlier, markets considered a cut certain, with a 35% chance of another half-point reduction.
Source: Ambito
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