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US dollar drops to six-week low after softer-than-expected jobs data

by Jessica Weisman-Pitts
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2023 11 03T092604Z 1 LYNXMPEJA208A RTROPTP 4 FINANCE COMPANIES LENDING

US dollar drops to six-week low after softer-than-expected jobs data

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – The dollar fell to a six-week low on Friday, after data showed the world’s largest economy created fewer jobs than expected last month, reinforcing expectations the Federal Reserve is likely to hold interest rates steady again at its December meeting.

The dollar index, a gauge of the greenback against six major currencies, dropped 0.8% to 105.29, after earlier sinking to 105.23, its lowest since September 20. The index was on track for its largest one-day fall since July. The euro was last up 0.8% at $1.0709, and thanks to gains earlier in the week was headed for a weekly gain of 1.4%, the largest since July.

Data showed nonfarm payrolls increased by 150,000 jobs last month. The numbers for September were revised lower to show 297,000 jobs created instead of 336,000 as previously reported.

“The (jobs) slowdown will likely keep the Fed on the sidelines going forward. One of their key concerns has been an overheated economy, especially after last quarter’s GDP growth, and this suggests that problem is going away,” said Brad McMillan, chief investment officer at Commonwealth Financial Network in Waltham, Massachusetts.

“Slower growth is still growth, and this jobs report is still in the sweet spot. We do see signs, however, that more weakness may be ahead,” he added.

Against the yen, the dollar slid 0.6% to 149.53 yen, capping a whirlwind week, in which the Japanese currency touched a one-year low against the dollar and 15-year trough against the euro.

The drop in the yen came after the Bank of Japan tweaked its yield curve control policy on Tuesday, but not by as much as markets had expected.

Kazuo Ueda, the central bank’s governor, will continue to dismantle its ultra-loose monetary policy and look to exit the decade-long accommodative regime next year, Reuters reported on Thursday, according to six sources familiar with the central bank’s thinking. Sterling rose 1.1% versus the dollar to $1.2327, after earlier hitting a six-week high of $1.2350. It is set for a weekly gain of 1.1%, also its most since July.

The dollar’s fall mirrors a decline in U.S. Treasury yields. The benchmark U.S. 10-year yield slid to a five-week low of 4.484%, and headed for a more than 30 basis-point retreat, its most since March 2020. This week’s fall was sparked by a combination of the U.S. Treasury Department announcing smaller-than-expected increases in longer-dated Treasury supply, and Fed Chair Jerome Powell seemingly less hawkish than markets expected at his press conference after the Fed’s Wednesday meeting. He did, however, leave the door open to a further increase in borrowing costs in a nod to the economy’s resilience.

Post-jobs data, markets are now pricing in a less than 10% chance of a rate increase in December compared with nearly 20% late on Thursday, according to the CME’s FedWatch tool.

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Currency bid prices at 10:11AM (1411 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 105.2900 106.2000 -0.85% 1.739% +106.2200 +105.1100

Euro/Dollar $1.0710 $1.0623 +0.80% -0.07% +$1.0737 +$1.0616

Dollar/Yen 149.5300 150.4700 -0.60% +14.07% +150.5150 +149.1800

Euro/Yen 160.14 159.79 +0.22% +14.14% +160.1400 +159.6100

Dollar/Swiss 0.8997 0.9060 -0.68% -2.69% +0.9074 +0.8985

Sterling/Dollar $1.2329 $1.2202 +1.05% +1.95% +$1.2347 +$1.2185

Dollar/Canadian 1.3689 1.3738 -0.35% +1.04% +1.3760 +1.3666

Aussie/Dollar $0.6487 $0.6434 +0.82% -4.83% +$0.6512 +$0.6420

Euro/Swiss 0.9634 0.9623 +0.11% -2.64% +0.9647 +0.9616

Euro/Sterling 0.8686 0.8703 -0.20% -1.79% +0.8721 +0.8686

NZ $0.5970 $0.5894 +1.30% -5.97% +$0.5992 +$0.5885

Dollar/Dollar

Dollar/Norway 11.0840 11.1590 -0.73% +12.88% +11.1790 +11.0550

Euro/Norway 11.8723 11.8470 +0.21% +13.14% +11.9021 +11.8350

Dollar/Sweden 10.9607 11.1063 -0.50% +5.31% +11.1230 +10.9332

Euro/Sweden 11.7391 11.7983 -0.50% +5.29% +11.8115 +11.7212

 

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Chibuike Oguh in New York, Alun John in London, and Ankur Banerjee in Singapore; Editing by Christina Fincher and Andrea Ricci)