TOKYO, Oct 3 (Askume) – The dollar rose to a one-month high against the yen on Thursday as a strong U.S. jobs market bolstered sentiment that the Federal Reserve is in no rush to cut interest rates.
Japan’s new prime minister said after a meeting with the central bank governor that the countryThe yen faced heavy selling pressure on Wednesday with the US unwilling to raise interest rates further .
The euro was close to a three-week low hit in the previous session as prospects for a rate cut this month strengthened after European Central Bank policymaker Isabel Schnabel took a dovish stance on inflation .
The safe-haven dollar saw some additional demand after Iran fired 180 ballistic missiles at Israel on Wednesday , raising threats of retaliation and fears of all-out war.
The dollar index, which measures the currency against the euro, yen and four other major rivals, rose to 101.70 by 0023 GMT, its highest level in three weeks and up 0.45% from the previous session.
The ADP National Employment Report on Wednesday showed that US private sector employment increased by 143,000 jobs last month, exceeding expectations, raising hopes that the monthly non-farm payrolls data due on Friday may be stronger.
Currently, traders estimate the probability of the United States cutting interest rates by another 50 basis points on Nov. 7 is 34.6%, following the Federal Reserve’s sharp cut to kick off the easing cycle last month. That probability was lower than 36.8% a day earlier and 57.4% a week ago, according to the CME Group’s FedWatch tool, but the probability remains high, said Ray Attley, head of FX strategy at National Australia Bank.
Attrill said that while ADP reports often provide poor forecasts for nonfarm wage numbers, Wednesday’s data “reduces the likelihood of a significant wage decline.”
“I think if tomorrow night’s payrolls report isn’t too bad overall, we’re going to see big price cuts (50 basis points).”
The dollar rose 0.09% against the yen to 146.575 yen, having touched 146.885 yen for the first time since Sept. 3.
Bank of Japan policymaker Asahi Noguchi, who is accommodative and opposes raising interest rates in July, will deliver a speech later in the day.
The euro was little changed and settled at $1.10455, not far from the low of $1.10325 hit on Wednesday, September 12.
The British pound held steady at $1.3261.
The Australian dollar was steady at $0.6884 against the US dollar.
Risk-sensitive currencies sold off in initial reaction to the Iranian attack on Wednesday, but there has been no sign of Israeli retaliation so far, giving traders a chance to restore balance.
“Markets are inherently poor in terms of pricing risk,” NAB’s Attrill said.
“These are events that the market deals with as they occur,” he said. “The market is aware of this, but I think they are sticking to their strategy of focusing on the fundamentals of the economy.”
