The U.S. dollar fell against the Japanese yen on Thursday as fresh economic data revealed a slowdown in the labor market and a slight rise in consumer prices, indicating the Federal Reserve might maintain its current stance on interest rates.
The U.S. Labor Department reported a 0.2% increase in the Consumer Price Index (CPI) for September, while the annual CPI growth was 2.4%, marking its lowest annual increase since February 2021. Economists had expected a 0.1% monthly increase and a 2.3% annual rise.
Additionally, the number of Americans filing for unemployment benefits surged last week, partially due to disruptions from Hurricane Helene and temporary layoffs at Boeing.
“There’s been a tug of war between concerns over inflation and employment,” noted Brad Bechtel, global head of foreign exchange at Jefferies in New York. He added that the Federal Reserve has recently shifted its focus more toward employment trends, which led to its recent 50 basis point rate cut.
As a result, the dollar weakened by 0.38% to 148.66 yen, after previously reaching 149.58 yen, its highest level since early August. Comments from Bank of Japan Deputy Governor Ryozo Himino, who supported the prospect of further rate hikes, contributed to the yen’s strength against the dollar.
The euro also dipped against the dollar, hitting its lowest point since August 8 and trading 0.14% lower at $1.0925. Meanwhile, the U.S. dollar index, which tracks the dollar against six major currencies, rose slightly by 0.07% to 102.96 in volatile trading.
In an interview with the Wall Street Journal, Atlanta Federal Reserve Bank President Raphael Bostic mentioned he would be comfortable pausing interest rate cuts at the next policy meeting, citing uncertainty in the recent economic data.
Market participants are currently pricing in an 85% probability that the Fed will lower rates by 25 basis points at its November 7 meeting, according to the CME Group’s FedWatch Tool.
Yields on the two-year U.S. Treasury note, a key indicator of rate expectations, declined by 2.8 basis points to 3.989%.
“The rise in jobless claims has shifted the market’s focus back to employment concerns,” commented John Velis, a strategist at BNY Mellon in Boston. He added that the recent positive job data for September may have been an outlier, prompting expectations of a rate cut in November.
The Australian dollar rose 0.14% to $0.67280, benefiting from a stock market rally in China, its major trading partner, following the launch of a liquidity support program by the Chinese central bank.
In the cryptocurrency market, Bitcoin fell by 2.08% to $59,119, while Ethereum declined by 0.36% to $2,344.66.
