Dollar profits from Japan political uncertainty, pound awaits UK budget
The dollar hit three-month highs against the yen on Tuesday as the loss of a parliamentary majority for Japan's ruling coalition in weekend elections muddied the political and monetary picture, while sterling was firm ahead of a new British budget.
The Chinese yuan, which touched its weakest level against the dollar since mid-August, offered little reaction to the possibility Beijing may issue over $1.4 trillion in new debt as part of a series of measures to shore up the economy.
The dollar is heading for its largest monthly rise against a basket of major currencies in 2-1/2 years, holding near three-month highs, ahead of a slew of U.S. employment and inflation data this week that could determine the path for Federal Reserve policy.
Recent data have highlighted the resilience of the U.S. economy, which, together with mounting market bets of a win by Republican candidate Donald Trump at next week's U.S. presidential election, have underpinned the dollar and pushed up Treasury yields.
The dollar index has risen 3.6% so far in October, marking its monthly performance since April 2022. It is up this year against every major currency except the pound .
This week's data slate includes the September U.S. core personal consumption expenditures price index - the Fed's preferred measure of inflation - on Thursday, as well as a flurry of jobs reports.
The yen has lost nearly 10% in value since September's 14-month high against the dollar . The dollar meanwhile, was last up 0.1% on the day at 153.375 .
The BOJ announces its monetary policy decision on Thursday, and is widely expected to leave rates unchanged.
In Europe, the pound edged up 0.1% to $1.2985 , a day before the Labour government's first budget in 14 years.
Source: Reuters
