The yen held onto to Thursday’s gains as investors continued to digest a less dovish message from the Bank of Japan (BOJ) in the previous session.
The US dollar started November off at a lower level after coming under pressure against the yen on Thursday.
Nonfarm payrolls data closes out the week, with economists polled by Reuters estimating 113,000 jobs were added in October, although analysts say that the number could be impacted by recent hurricanes in the US.
That’s likely to make the October jobs report “incredibly hard to read,” Tapas Strickland, head of market economics at National Australia Bank, wrote in a note.
The unemployment rate, expected to come in at 4.1%, may offer a clearer picture of labour markets.
“Such an outcome would likely see the unemployment rate coming in well below the FOMC’s September projections of the unemployment rate lifting to 4.4% in Q4 2024. And thus continue to question the need for rate cuts,” he said.
Data overnight suggested upward price pressures continue to ease, adding to a trend of upbeat data and supporting bets that the Fed will cut interest rates by 25 basis points next week.
The dollar index, which measures the greenback against six major currencies, was up 0.03% at 103.91.
The Japanese currency was last largely unchanged at 152.02 per dollar.
On Thursday, the central bank maintained ultra-low interest rates but said risks around the US economy were somewhat subsiding, signalling that conditions are falling into place to raise interest rates again.
“We think the chances of a Dec rate hike have somewhat increased after Gov (Kazuo) Ueda’s press conference,” Morgan Stanley MUFG economists Takeshi Yamaguchi and Masayuki Inui wrote in a report on Thursday.
Their base case remains for the BOJ to raise rates again in January to 0.5%, although they noted that factors such as dollar/yen and inflation data leading up to the year-end decision will be important.
The euro stood just off a two-week high against the greenback, buoyed this week after data showed that the euro zone’s inflation accelerated more than expected in October. It was last down 0.02% at US$1.0882.
Sterling remained on the backfoot, down 0.06% to US$1.2891, as investors continued to react after British finance minister Rachel Reeves launched the biggest tax increases since 1993 in her first budget. The pound slid to its lowest since mid-August at US$1.28445 on Thursday.
The Fed’s monetary policy decision next week comes just days after the US presidential election on Tuesday.
Republican candidate Donald Trump and Democratic vice-president Kamala Harris remain neck and neck in several polls, but some investors have been putting on trades betting Trump will win, lifting the dollar and US Treasury yields.
Trump’s pledges to implement tax cuts, loosen financial regulations and raise tariffs are seen as inflationary and could slow the Federal Reserve in its policy easing path.
In cryptocurrencies, bitcoin, the world’s largest cryptocurrency by market cap, last traded at around US$70,132.