The yen received some much-needed reprieve on Thursday as the dollar and US Treasury yields both stabilised slightly lower after mixed US economic data overnight left markets discounting the Federal Reserve’s decision to raise interest rates again this year.
The dollar index, which measures the value of the US currency against six other currencies, remained close to overnight levels at 106.78.
The dollar lost some of its recent gains as private payrolls in the United States expanded significantly less than predicted in September, according to the ADP National Employment Report released on Wednesday, albeit this likely exaggerates the pace of the labor market slowdown.
Longer-term US Treasury rates fell from 16-year highs following the data and were below recent highs in the Asian morning.
Meanwhile, the Institute for Supply Management’s (ISM) non-manufacturing purchasing managers’ index (PMI) fell 0.9 points to 53.6, still above the 50-point threshold that separates monthly expansion from contraction.
“Although the U.S. economy appears resilient, if not overly so, the ISM Services PMI at least provides one data point to suggest that economic activity isn’t resuming,” wrote Kyle Rodda, markets analyst at Capital.com, in a note.
The yen, which is sensitive to US yields, was last trading around 148.85 yen, down almost 0.2% from late US levels and off Tuesday’s low of 150.165.
Questions about possible Japanese involvement arose after the yen gained 2% following the 150-line break, but the Bank of Japan’s money market data showed on Wednesday that Japan most likely did not act in the currency market the day before.
Elsewhere, the euro was basically unchanged at $1.0512, remaining above this week’s new low of $1.0448.
According to a Reuters poll, the consensus view among 20 analysts on how low the euro will fall this month is $1.04, with only one responder predicting parity. There was no mention of parity in any of the forecasters’ point forecasts.
Sterling was trading at $1.2139, down from the previous day’s low of $1.20385 per dollar.
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