USDJPY is higher by 5.49% this month, pulling away from the 100- and 200-day moving averages which had capped dollar gains for the last two weeks. No verbal intervention on behalf of the JPY from Japan’s Minister of Finance Mr. Mimura suggests two possibilities: either yen weakness is not a concern (at 153.00) or intervention will be postponed until after the U.S. general election. The yen’s October decline leads all losses vs. the dollar among the major currencies.
U.S. Weekly Jobless Claims (for the week ending Oct 19th) were 227k, below the 242k estimate and a significant improvement from the prior week’s 260k tally. But Continuing Claims (those registered as unemployed to receive benefits) increased to 1897k (1875k est.), its highest mark since November of 2021 in the waning days of Covid. So even though weekly claims have ranged between 200/250k since November ’21, it’s taking longer to find jobs and the ranks of the unemployed are growing.
The dollar and U.S. Treasury yields are lower following the jobs data release. The dollar is weaker vs. all G10 currencies: -0.48% vs. NOK, -0.46% vs. GBP, -0.38% vs. JPY, -0.27% vs. AUD & NZD, and -0.21% vs. EUR. The U.S. Dollar Index is -0.25% at 104.17, but still above yesterday’s 104.09 low as dollar bulls show their hand in buying the dip.
Yields are marginally lower in all tenors. The 10-year yield is –0.018% at 4.22%, doing no technical damage to the tenor’s long-term uptrend.
The Bank of Canada cut its overnight rate by 50bps yesterday in move that was widely expected. Canada has now cut 4 times this year for a total of 1.25%.
USDMXN has been in a holding pattern for the past week, having traded with some intraday range but closing with little net move. The average close over the 6 previous trading days is only +0.02%, uncharacteristically low volatility for a pair that includes a MXN component. The possibility of Trump winning in November and implementing an economic plan featuring tariffs has given traders a reason to pause.
