Dollar Has Worst Week Since August as Data Delayed
A dollar gauge had its worst week in nearly two months as a key set of employment data was delayed by the US government shutdown, further obscuring Federal Reserve’s interpretation of the economy. The yen slipped a second day, yet still headed for its best week in four months ahead of an election to choose the next leader of the ruling Liberal Democratic Party on Saturday.
The Bloomberg Dollar Spot Index fell 0.1%, down 0.4% this week, the most since Aug. 8
The Bureau of Labor Statistics didn’t release September non-farm payroll data due Friday because of the shutdown, adding to the list of missed reports on labor
The Commodity Futures Trading Commission will not be publishing commitment of traders on Friday, citing the shutdown
The Institute for Supply Management’s index of services dropped 2 points to 50, a level that indicates stagnation, the group said Friday. The figure was weaker than all estimates in a Bloomberg survey of economists
Federal Reserve Governor Stephen Miran said he’d amend his inflation view if housing costs unexpectedly jump, conceding that his out-of-consensus opinion isn’t necessarily set in stone
“If this government shutdown drags on we see it as more likely the Fed will cut and that points to potential dollar downside risks, although the impact would be modest given the rates market is priced for a cut,” analysts at MUFG Derek Halpenny, Lee Hardman and Abdul-Ahad Lockhart wrote
USD/JPY rose 0.1% to 147.47, following comments from Bank of Japan Governor Kazuo Ueda who stressed the importance of keeping accommodative financial conditions, damping market expectations of an interest-rate hike
For the week, the yen rose 1.4%, best performer in G-10
“There was a combination of JPY-positive developments over the past week,” Goldman Sachs Group Inc. analysts including Kamakshya Trivedi wrote. “One factor has likely been reports of Koizumi leading Takaichi—the two leading candidates”
They wrote that they “still favor reengaging with USD/JPY shorts in options once the election has passed—even if Takaichi wins and October BOJ pricing continues to come out”
“We would also expect to see relatively short-lived upside in the case of a Takaichi victory, perhaps as quick as that after Ishiba’s resignation, as many may view it as an opportunity for better entry levels,” they said
USD/CAD fell 0.1% to 1.3950
MUFG analysts recommend shorting CAD/CHF with target of 0.5525 and stop-loss at 0.5825, arguing that declining oil prices and a dovish outlook for the Bank of Canada have given the loonie’s selloff momentum, while the Swiss National Bank has indicated it’s reluctant to reduce rates further into negative territory
CAD/CHF fell 0.2% to 0.5702 Friday
OPEC+ nations are trying to reach consensus on how to adjust their oil production next month, with either a modest or more substantial supply increase possible, delegates said
GBP/USD gains 0.3% to 1.3483; options markets still lean bearish on the pound overall, but the mood has eased compared with a week ago, except around the UK’s autumn budget
Source : Bloomberg.com
