The yen strengthened to 157.70 per dollar on Friday, pulling back from a level near 159 that is widely seen as a potential trigger for currency intervention. The rebound followed a weaker-than-expected U.S. jobs report that cut the odds of a Federal Reserve rate hike next month and pushed the dollar down.
The yen rebounded against the dollar on Friday, tempering bets on a near-term Federal Reserve rate hike after a soft U.S. jobs report. The yen strengthened to 157.70 per dollar after earlier nearing 159, a level widely seen as a potential trigger for policy intervention.
Weak payrolls reshape the rate outlook
Money markets had been evenly split on the odds of a Fed rate increase next month before Friday's report. The U.S. payroll report then showed employment fell by 23,000 jobs, confounding a Reuters poll that had forecast an increase of 80,000, and the implied odds of a hike fell to about 40% from roughly 55% earlier.
Analysts said the report gives the Fed more room to hold rates steady while it weighs incoming data, including next week's U.S. inflation report. According to Reuters: "History doesn't repeat, but sometimes it rhymes", said Lindsay Rosner, head of multi-sector fixed-income investing at Goldman Sachs Asset Management.
Chris Zaccarelli, chief investment officer at Northlight Asset Management, said the report forces the Fed to weigh employment alongside price stability, making a hold at its next meeting more likely than a hike.
Dollar slips as Treasury yields ease
The dollar index fell 0.3% to 99.61, with the currency hovering near six-week lows, as rate expectations eased and gave the yen room to recover from its earlier lows. The Nasdaq also rose 1.3% near midday, a separate move tied to the same shift in rate expectations.
Treasury yields moved lower too: the 2-year note yield dropped 5 basis points to 4.20%, while the 10-year yield fell 2 basis points to 4.64%.
Source: Reuters
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