The dollar index, which measures the greenback against a basket of key currencies, was flat at 97.77. The euro was up 0.2% at US$1.1736. Sterling firmed 0.1% to US$1.345.
“We’ve got the government shutdown in the US … for market participants it means we’re not getting any of the data releases we would usually get like the non-farm payrolls data today,” said Michael Brown, senior research strategist at Pepperstone.
“I think that’s why we’re seeing things trade in such listless fashion.”
BOJ governor strikes cautious tone
Though ISM data is due out of the US later, Brown said he did not expect it to move the needle.
The yen eased 0.1% to 147.375 per dollar, having earlier fallen as much as 0.4%. But it remained on track for a 1.4% advance this week that would be the biggest since mid-May.
BOJ governor Kazuo Ueda struck a cautious tone in comments about the global economy, lowering expectations of an imminent rate hike. Markets were also focused on a Liberal Democratic Party election on Saturday that will determine Japan’s next prime minister.
“Market participants are a little bit disappointed potentially … he (Ueda) didn’t really lean into the idea of an October rate hike as much as some of his colleagues have done in recent sessions, that’s why we’ve seen a little bit of pressure on the yen,” said Brown.
Markets were keeping a close eye on speeches by BOJ officials this week after the central bank’s tankan survey on Wednesday showed confidence among big manufacturers improved for the second straight quarter.
Deputy governor Shinichi Uchida said on Thursday that the business mood was improving and corporate profits remained high even as US tariffs weighed on exports.
But in a speech on Friday, governor Ueda put the focus back on how global factors, particularly the health of the US economy, could affect the trajectory of wages and prices in Japan.
Goldman Sachs economists said in a note that Ueda’s speech “supports our view that the possibility of an October rate hike is very low.”
The LDP election also has consequences for Japan’s budget and central bank policies.
Among the frontrunners, dovish party veteran Sanae Takaichi could trigger more bond market uncertainty, while farm minister Shinjiro Koizumi and top government spokesman Yoshimasa Hayashi are less likely to rock the boat.
Two more Fed rate cuts expected this year
In the US overnight, a Chicago Fed report that combined private and available public data estimated the September jobless rate was 4.3%, the same as in August and evidence that a feared rapid rise in unemployment had not yet begun.
But details of the report, along with other data, pointed to sluggishness in the labour market. The ADP National Employment report on Wednesday showed private payrolls decreased by 32,000 in September, boosting expectations that the Federal Reserve would cut interest rates twice more this year.
Traders see a 25-basis-point cut at the Fed’s October meeting as almost certain and are pricing in an 89% probability of an additional cut in December, according to the CME Group’s FedWatch Tool.
Dallas Fed President Lorie Logan on Thursday said the central bank appropriately cut rates last month to guard against the risk of a sharp deterioration in the job market, but said that so far the cooling has been gradual and signalled she was not eager to cut rates further.
Elsewhere, a few Fed, ECB, Bank of England central bankers were due to speak at the farewell symposium of the Dutch central bank governor Klaas Knot, including ECB President Christine Lagarde and the Bank of England’s Andrew Bailey.