The yen maintained its gains from Thursday as investors processed the Bank of Japan’s less dovish stance. The US dollar began November lower after facing pressure against the yen. Economists expect 113,000 jobs were added in October, but this number may be influenced by recent hurricanes. The unemployment rate is projected at 4.1%, potentially indicating a stronger labor market. Additionally, the Euro reached a two-week high amid rising inflation in the Eurozone, while the British pound faced declines following significant tax increases announced by the UK finance minister.
The yen has maintained its gains from Thursday, as investors continue to process the less dovish message from the Bank of Japan (BOJ) during the previous session.
The US dollar started November at a lower level after facing pressures from the yen.
Economists surveyed by Reuters estimate that 113,000 jobs were created in October, although analysts suggest that this figure may be influenced by the recent hurricanes in the United States.
This may complicate the interpretation of the October employment report, noted Tapas Strickland, head of market economics at the National Australia Bank, in a statement.
The unemployment rate, expected to settle at 4.1%, could provide a clearer picture of labor market conditions.
‘Such an outcome would likely see the unemployment rate fall well below the September projections from the FOMC, which anticipated a rise to 4.4% in the fourth quarter of 2024. This would continue to challenge the necessity of a rate cut,’ he mentioned.
Recent data indicates that upward price pressures are easing, contributing to a trend of optimistic data and supporting bets that the Fed will lower interest rates by 25 basis points next week.
The dollar index, which gauges the greenback against six major currencies, rose by 0.03% to 103.91.
The Japanese currency remained nearly unchanged at 152.02 per dollar.
On Thursday, the central bank kept interest rates extremely low, while noting that the risks associated with the US economy were somewhat diminishing, signaling that conditions may be ripe for a rate hike.
‘We believe that the chances of a rate increase in December have somewhat increased following the governor (Kazuo) Ueda’s press conference,’ economists Takeshi Yamaguchi and Masayuki Inui at Morgan Stanley MUFG wrote in a report released that day.
Their baseline assumption remains that the BOJ will raise its rates to 0.5% in January, although they highlighted that factors such as the dollar/yen exchange rate and inflation data before the year-end decision will be critical.
The euro reached its highest level in two weeks against the greenback, supported by data showing that inflation in the eurozone accelerated more than expected in October. It dipped 0.02% to $1.0882.
The British pound remained subdued, down 0.06% to $1.2891, as investors continued to react to UK Finance Minister Rachel Reeves’ announcement of the largest tax increases since 1993 in her first budget. The pound hit its lowest point since mid-August at $1.28445 on Thursday.
The Fed’s upcoming monetary policy decision will come just days after the US presidential election on Tuesday.
Republican candidate Donald Trump and Democratic Vice President Kamala Harris remain neck and neck in several polls, but some investors have begun positioning bets on Trump’s victory, leading to a rise in the dollar and US Treasury yields.
Trump’s promises to implement tax cuts, ease financial regulations, and increase tariffs are viewed as inflationary and could slow the Fed’s easing policies.
In the realm of cryptocurrencies, Bitcoin, the world’s largest cryptocurrency by market capitalization, was last traded at approximately $70,132.