Dollar dips as US private payrolls come in below expectations, while manufacturing orders surge in September. No interventions were detected in Tuesday’s BOJ money market data. Written by Gertrude Chavez-Dreyfuss Reuters, NEW YORK, Oct. 4 – A mixed bag of statistics on Wednesday suggested that there are some areas of weakness in the largest economy in the world, further reducing the likelihood that the Federal Reserve would raise interest rates before the end of the year. The dollar also declined along with the decline in U.S. Treasury yields. On the other hand, the yen strengthened marginally against the dollar and retreated from the widely watched 150-to-dollar level after a brief uptick in the previous session sparked rumours that Japanese officials may have interfered to support the currency.
After weaker-than-expected U.S. private payrolls based on the ADP National Employment Report, the dollar index, which measures the value of the dollar against six peers, was down 0.3% at 106.69, giving up some of its recent gains. However, the index was still close to the roughly 11-month high of 107.34 set in the previous session. After U.S. factory orders increased 1.2% in August, exceeding estimates of a 0.2% increase, the dollar did partially recover some of its losses.
The slight fall in a U.S. services sector index last month was more than compensated by that. “This morning’s services sector data helped soften expectations ahead of Friday’s non-farm payrolls report, and we’ve seen a slight pullback in odds on another rate hike from the Federal Reserve before year-end,” said Karl Schamotta, chief market analyst at Corpay in Toronto. “More broadly, it appears that the surge in Treasury yields and the corresponding dollar rally have peaked.” After soaring unexpectedly by almost 2% at one stage on Tuesday to 147.30, its best in three weeks, the Japanese yen was last steady against the dollar on the report at 149.04 per dollar.
It dropped to 150.165 per dollar, its lowest level since October 2022, before the rise. According to Helen Given, an FX trader at Monex USA in Washington, “Dollar/yen is currently trading pretty close to levels we saw just three sessions ago, which tells me yesterday’s move was not, in fact, an intervention.” I anticipate an exaggerated market response to reaching the psychological 150 number. Masato Kanda, Japan’s senior currency ambassador, stated that he would refrain from commenting on whether Tokyo interfered with the exchange rate on Tuesday, but added that “We have only taken steps that have the understanding of U.S. authorities.”
However, according to information from the Bank of Japan’s money market, it seems likely that Japan did not intervene in the foreign exchange market on Tuesday. The yen was supported by Japanese officials last year for the first time since 1998. As a result of the Fed raising interest rates, U.S. bond yields have increased significantly when compared to their Japanese counterparts, causing the yen to fall by almost 12% against the dollar this year. Longer-dated Treasury yields began to decline on Wednesday after reaching 16-year highs overnight and a brief increase in 30-year levels above 5%. In other news, the euro gained 0.5% to $1.0515, not too far from its worst level since December on Tuesday of $1.0448, which sparked talk of a return to $1.
4:07PM (2007 GMT) Description YTD Pct High Bid Low Bid RIC Last U.S. Close Pct Change Earlier Change Dollar-based session index Euro/Dollar: 106.7000 107.0700 -0.34% 3.102% +107.2400 +106.5000 149.0450 149.0900 -0.03% +13.68% +149.3200 +148.7350 Euro/Yen 156.70 155.93 +0.49% +11.69% +156.7700 +155.8400 Dollar/Swiss $1.0513 $1.0467 +0.46% -1.87% +$1.0533 +$1.0452 Dollar/Canadian 1.3746 0.9162 0.9207 -0.49% -0.92% +0.9231 +0.9140 Sterling/Dollar $1.2147 $1.2078 +0.60% +0.47% +$1.2176 +$1.2039 Aussie/Dollar 1.3709 +0.27% +1.45% 1.3779 +1.3691 $0.6327 $0.6302 +0.44% -7.15% Euro/Swiss: +0.6342 +0.6287 USD Euro/Sterling: 0.9631 0.9640 -0.09% -2.67% +0.9653 +0.9620 0.8653 0.8667 -0.16% -2.16% +0.8682 +0.8640 NZ Dollar/Dollar/Norway: $0.5913 $0.5908 +0.16% -6.80% +$0.5925 +$0.5871 Euro/Norway: 10.9920 10.9550 +0.47% +12.15% +11.0370 +10.9230 11.5596 Dollar/Sweden: 11.4687 + 0.90% + 10.16% + 11.5810 + 11.4594 Euro/Sweden: 11.0571 11.0864 +0.29% +6.24% +11.1188 +10.9939 11.6250 11.5911 +0.29% +4.26% +11.6621 +11.5750