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Yen holds losses before next clue on Fed rates from jobs data

39522424.2 (39540170) - 18_08_2016 - JAPAN-COMPANIES_CURRENCY.jpg
The yen remained weaker on speculation strong US jobs data later this week will boost the likelihood the Federal Reserve will raise interest rates, widening policy divergence with the Bank of Japan.

[TOKYO] The yen remained weaker on speculation strong US jobs data later this week will boost the likelihood the Federal Reserve will raise interest rates, widening policy divergence with the Bank of Japan.

The Japanese currency dropped 1.7 per cent against the greenback in the past four sessions, the longest losing streak in five months. Fed Chair Janet Yellen and other senior central bank officials suggested last week the case for tightening US policy had strengthened, while Bank of Japan governor Haruhiko Kuroda reiterated his readiness to ease monetary policy further.

US economy watchers are turning their attention to Friday's payrolls report. The Fed and the BOJ have their next policy meetings on Sept 20-21.

The risk that the yen will resume its climb to 100 per US dollar is "likely to be limited ahead of the US jobs data on Friday," Masafumi Yamamoto, the chief currency strategist at Mizuho Securities Co in Tokyo, wrote in a note to clients.

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Market voices on:

"A strong number would refuel expectations for a September rate hike and support the dollar."

The yen was little changed at 101.79 per US dollar as of 9:08am in Tokyo from 101.92 at the close in New York. The Japanese currency fell to a three-week low of 102.39 Monday.

The Bloomberg Dollar Spot Index, which tracks the greenback against its 10 major peers, was little changed after advancing 0.1 per cent for its sixth gain in seven days.

Reinvigorated Hiring

US employers added 180,000 jobs in August, according to the median estimate of a Bloomberg survey of economists. The monthly labour-force number has exceeded expectations in the past two readings, pointing to renewed vigor in the employment market.

"While there is no fresh factor, expectations for a US interest rate hike are unlikely to wane significantly until Friday's jobs data," Naoto Ono, an analyst in Tokyo at Ueda Harlow Ltd, which provides margin-trading services, wrote in a note.

"The yen may swing between demand for dollars from the Japanese and selling by Japanese exporters, keeping prices in a range."

Futures indicated a 36 per cent chance that the Fed will raise rates in September as of Monday, up from 24 per cent a week earlier. The odds of an increase by year-end have risen to 61 per cent from 51 per cent.

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