FOREX-Dollar slips against yen after data shows labor market weakness, rising inflation

BY Reuters | ECONOMIC | 10/10/24 03:48 PM EDT
    (Updates headline, first paragraph and prices throughout, adds
new analyst comment and Bostic interview)
    By Chibuike Oguh
       NEW YORK, Oct 10 (Reuters) - The U.S. dollar slipped
against the yen on Thursday as investors weighed data showing
labor market weakness as well as a slight uptick in consumer
prices, suggesting that the Federal Reserve will likely continue
cutting interest rates.
    Labor Department data on Thursday showed that the consumer
price index increased 0.2% in September. However, in the 12
months through September the CPI climbed 2.4%, which was the
smallest year-on-year rise since February 2021.
    Economists polled by Reuters had forecast the CPI edging up
0.1% and rising 2.3% year-on-year.
    Other data from the Labor Department also showed that the
number of Americans seeking unemployment benefits surged last
week, driven partly by Hurricane Helene and furloughs at Boeing (BA)
.
    "The market's been in a bit of a tug of war between caring
more about inflation versus caring more about employment," said
Brad Bechtel, global head of FX at Jefferies in New York.
"Clearly, the Fed has shifted its view recently when it decided
to focus more on the employment side of the equation, and then
cut 50 basis points a few weeks ago and they also quickly turned
around and said they may not cut 50 basis points again."
    The greenback was down 0.38% at 148.66 yen after rising to
as high as 149.58 yen for the first time since Aug. 2.
Bank of Japan Deputy Governor Ryozo Himino's latest comments on
Thursday supporting more rate hikes if the economy moves in line
with bank projections, had helped to keep the dollar slightly
weaker against the yen.
        The euro dropped to its lowest since Aug. 8
against the dollar and was down 0.14% on the day at $1.0925.
Against the Swiss franc, the dollar  weakened 0.45% to
 0.856.
    The dollar index, which measures the currency against
six key rivals including the yen, the pound sterling and euro,
was up slightly by 0.07% to 102.96 in choppy trading after
hitting its highest since August 15.
    In a Wall Street Journal interview on Thursday, Atlanta
Federal Reserve Bank President Raphael Bostic said he would be
"totally comfortable" skipping an interest-rate cut at an
upcoming meeting of the U.S. central bank. He added that the
"choppiness" in recent data on inflation and employment may
warrant leaving rates on hold in November.
        Traders are betting a nearly 85% chance on the Fed
cutting rates by 25 basis points at its next policy decision on
Nov. 7, and a nearly 15% probability of no change, the CME
Group's FedWatch Tool showed.

        The 2-year note yield, which typically moves
in step with interest rate expectations, fell 2.8 basis points
to 3.989%.

    "The claims number dominated the story and that's driven
bond yields lower because it's reminded the market that the Fed
actually has some concerns about the employment story," said
John Velis, FX and macro strategist at BNY in Boston.
    "We had such a good September job print that this kind of
swings back in the other direction and has taken out some of
that restrictive Fed pricing, or let me say it's put in some
more expectations of a rate cut for the November 7th meeting."
    The risk-sensitive Australian dollar was up 0.14%
to $0.67280. It earlier rose more than 0.3% on the back of an
equity rally in top trading partner China as the East Asian
nation's central bank launched a swap programme aimed at
supporting the stock market.
    China's finance ministry is due to hold a highly anticipated
news conference on fiscal policy on Saturday. The dollar
  weakened 0.12% to 7.084 versus the offshore Chinese
yuan.
    In cryptocurrencies, bitcoin fell 2.08% to
$59,119.00. Ethereum declined 0.36% to $2,344.66.


 Currency bid prices at 10 October? 07:10 p.m. GMT
 Description                                        RIC        Last      U.S. Close Previous Session  Pct Change  YTD Pct  High Bid  Low Bid
 Dollar index                                                  102.97    102.88                       0.09%       1.58%    103.17    102.71
 Euro/Dollar                                                   1.0923    1.094                        -0.14%      -1.03%   $1.0955   $1.09
 Dollar/Yen                                                    148.7     149.28                       -0.25%      5.58%    149.49    148.4
 Euro/Yen                                                      1.0923?   163.31                       -0.53%      4.38%    163.6     162.19
 Dollar/Swiss                                                  0.8571    0.8609                       -0.44%      1.85%    0.8615    0.8559
 Sterling/Dollar                                               1.3045    1.3075                       -0.21%      2.53%    $1.3094   $1.3011?
 Dollar/Canadian                                               1.3757    1.3711                       0.34%       3.79%    1.3776    1.3702
 Aussie/Dollar                                                 0.6727    0.6719                       0.15%       -1.31%   $0.6743   $0.6702
 Euro/Swiss                                                    0.9362    0.9416                       -0.57%      0.82%    0.9419    0.9345
 Euro/Sterling                                                 0.837     0.8367                       0.04%       -3.44%   0.8385    0.8355
 NZ Dollar/Dollar                                              0.6079    0.6063                       0.29%       -3.77%   $0.6097   0.605
 Dollar/Norway                                                 10.7449?  10.7767                      -0.3%       6.01%    10.7954   10.7342
 Euro/Norway                                                   11.7364   11.79                        -0.45%      4.57%    11.8034   11.7286
 Dollar/Sweden                                                 10.4035   10.3946                      0.09%       3.34%    10.4285   10.3697
 Euro/Sweden                                                   11.3662   11.3738                      -0.07%      2.16%    11.3825   11.3524





 (Reporting by Chibuike Oguh in New York; additional reporting
by Harry  Robertson and Kevin Buckland; Editing by Chizu
Nomiyama and Diane Craft)

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