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Tokyo - The dollar slumped against its major peers as disappointing jobs growth in the US weakened the case for a Federal Reserve interest-rate increase this month.
A broader gauge of the greenback retreated after two weeks of gains and the South Korean won headed for its strongest two-day advance in more than a month. Friday’s payrolls data in the US showed hiring moderated more than forecast in August, following an earlier report that indicated a surprise manufacturing contraction.
The yen rose after Bank of Japan Governor Haruhiko Kuroda failed to provide clarity on new initiatives that may be used to stoke inflation.
“The disappointing August nonfarm payrolls report essentially reduced the risk or delayed a September fed funds rate hike,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney.
“That usually supports the risky assets like the high-yielding currencies” of Australia and New Zealand, he said.
The yen jumped 0.6% to ¥103.39/$ as of 07:44. It had reached ¥104.32/$ on Friday, its weakest level since July 29. The New Zealand dollar added 0.7% to 73.40 US cents while the Aussie rose 0.4% to 76.03c. The South Korean won surged more than 1% to lead gains in most Asian counterparts. The won has advanced 1.4% sine Thursday, its biggest two-day climb since the period to August 1.
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, retreated 0.3% after gaining 1.5% over the past two weeks.
Kuroda said in a speech in Tokyo on Monday a reduction in the level of monetary policy accommodation, as called for by “some market participants,” won’t be considered. The central bank has a broad range of policy options and other new ideas “should not be off the table,” he said, declining to specify what other measures might be considered if needed. Both the BOJ and the Fed hold meetings September 20 to September 21.
“While Kuroda denied any speculation about tapering, he spurred some disappointment for those looking for clear clues on policy action this month,” said Yousuke Hosokawa, head of foreign-exchange sales at Sumitomo Mitsui Trust Bank in Tokyo.
“With markets losing direction after the US jobs data fell short of adding fuel to US rate hike expectations this month, Kuroda’s comments were neither supportive for aggressive selling nor for buying of the dollar.”
‘Reasonably strong’
American employers added 151 000 workers to nonfarm payrolls in August, below the 180 000 projected by economists. The increase came in the wake of a jump in July that was revised up to 275 000. Richmond Fed President Jeffrey Lacker said on Friday the message he took from the August data was that “labor markets are continuing to tighten.” He called the report “reasonably strong.”
Average monthly hiring over the past three months was close to the figure prior to the rate increase last December, suggesting little change in the labour-market trend, Naoto Ono, an analyst in Tokyo at Ueda Harlow Ltd., which provides margin-trading services, wrote in a note to clients.
“Even if there are some corrections to the dollar’s strength, adjustments will be shallow as the currency remains supported by rate-hike expectations,” Ono wrote. “The jobs report was supportive of a rate increase this year.”
Futures show the likelihood of a September rate increase at 32% compared with 42% on August 26. The odds of a December move by the Fed stand at 59% compared with 60% a day before the jobs report.
