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Currency market muted as investors eye US jobs report, election
2024-11-01 15:13:29

By Brigid Riley


TOKYO (Reuters) -The dollar steadied against major peers on Friday, with currency moves muted as investors awaited the U.S. jobs report to confirm economic resiliency heading into the Federal Reserve's monetary policy meeting and a close-call U.S. presidential election next week.


The U.S. dollar started the month not far off a one-week low after coming under pressure against the yen and on Thursday.


But the greenback saw its biggest monthly gains in just over two-years in October, as investors pared back aggressive Fed rate cut bets and weighed the U.S. election outlook.


U.S. nonfarm payrolls data closes out the week, with economists polled by Reuters estimating 113,000 jobs were added in October, although analysts say the number could be impacted by recent hurricanes.


Headline numbers could easily miss estimates as a result, although a sustained market reaction should be limited, said Sean Callow, senior FX analyst at InTouch Capital Markets.


Analysts said the unemployment rate will likely give a better read on the overall health of the labour market. It's expected to come in at 4.1%.


"So long as it remains below 4.3%, pricing for the Fed funds rate shouldn't change much from (a 25 basis point cut) next week and likely another 25bp in Dec," said Callow.


The dollar index, which measures the greenback against six major currencies, last rose 0.09% to 103.97.


The yen gave up some of Thursday's gains, sliding 0.31% to 152.49 per dollar as domestic traders grew cautious ahead of a three-day weekend in Japan amid big risk events.


But less dovish comments from Bank of Japan Governor Kazuo Ueda following the central bank's decision to stand pat on Thursday had the currency well off a three-month low of 152.885 hit earlier this week.


"We think the chances of a Dec. rate hike have somewhat increased after Gov. 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 factors such as the dollar/yen exchange rate and inflation data leading up to the year-end decision will be important.


The Fed's monetary policy decision next week comes just days after the U.S. 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 U.S. Treasury yields.


Trump's pledges to implement tax cuts, loosen financial regulations and raise tariffs are seen as inflationary and could slow the Fed in its policy easing path.


Elsewhere, China's manufacturing activity swung back to growth in October as an expansion in new orders led to a pickup in production growth, a private sector survey showed on Friday.


Separate data showed prices of new homes in China rose at a faster pace in October.


The offshore yuan traded down about 0.12% at 7.1295 per dollar, while the onshore yuan was 0.06% lower at 7.1219.


The euro stood around a two-week high against the greenback, buoyed this week after data showed euro zone inflation accelerated more than expected in October. It was last down 0.06% at $1.0877.


Sterling was mostly unchanged at $1.2901, after tumbling to its lowest since mid-August at $1.28445 on Thursday.


In cryptocurrencies, bitcoin, the world's largest cryptocurrency by market cap, last fetched around $69,544.