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FOREX-Yen firms after less dovish BOJ, dollar dips ahead of inflation data
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FOREX-Yen firms after less dovish BOJ, dollar dips ahead of inflation data
Oct 31, 2024 4:26 AM

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Yen firms to as much as 151.92 per dollar

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Euro unchanged after the bloc's strong Oct inflation data

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Sterling rises on higher for longer rate view

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Dollar edges lower ahead of PCE data

(Updates at 1025 GMT)

By Brigid Riley and Medha Singh

TOKYO/LONDON, Oct 31 (Reuters) - The yen firmed on

Thursday after the Bank of Japan took a less dovish tone than

expected while the U.S. dollar ticked lower ahead of jobs data

later this week and the U.S. presidential election next week.

The dollar was last down 0.6% on the Japanese currency at

152.360 yen as the BOJ maintained ultra-low interest

rates but said risks around the U.S. economy were somewhat

subsiding, signalling that conditions are falling into place to

raise interest rates again.

Governor Kazuo Ueda's remarks were seen as less dovish than

those made before the meeting that the BOJ could "afford to

spend time" scrutinising the fallout from risks such as U.S.

economic uncertainties.

The BOJ cut its core consumer inflation forecast but said

risks were skewed to the upside for that year, causing the yen

to rise, said Andrea Cicione, head of strategy at

GlobalData.TSLombard.

"This was a deliberate comment by the BOJ to stop this

weakening in the yen that has been going on for six weeks."

The Japanese currency has taken a beating, down around 6%

for the month as the dollar and U.S. Treasury yields have

hovered around their highest since July.

Japan's political shake-up has only added to the yen's woes,

heightening uncertainty about the country's fiscal and monetary

policy outlook.

The yen also firmed on other currencies on Thursday with the

euro down 0.5% at 165.7 yen.

Elsewhere, sterling firmed 0.3% to $1.2995, a day

after Britain's finance minister Rachel Reeves' launched the

biggest tax increases since 1993 in her first budget. The

big-spending plans prompted traders to bet on fewer interest

rate cuts by the Bank of England.

The euro edged 0.2% higher to $1.087325 after data

showed the bloc's inflation accelerated more than expected in

October.

The report follows better than expected third-quarter euro

zone GDP data on Wednesday that bolstered bets against a larger

interest rate cut by the European Central Bank in December.

The dollar index, which measures the currency against

six major rivals, dipped 0.1% to 103.94, after its recent surge

put it on pace for its biggest monthly gains against peers since

April 2022.

JOBS, ELECTION IN FOCUS

All eyes were on data on the U.S. Personal Consumption

Expenditures (PCE) Price Index for September on Thursday and the

closely-watched nonfarm payrolls report on Friday.

Economists polled by Reuters estimate 113,000 jobs were

added in October, although the number could be lower due to

recent hurricanes.

But the jobs report may find itself overshadowed in the

run-up to the U.S. presidential election on Tuesday.

"A slightly hotter or slightly cooler (jobs) number to me

probably doesn't change the dial too much given the upbeat trend

in recent economic data," said IG Market Analyst Tony Sycamore.

"It makes sense to me to be ... taking some risk off and

moving to the sidelines" ahead of a week that will "set the tone

for the end of the year," he said.

Some investors have been putting on trades betting

Republican candidate Donald Trump will win, helping to lift the

dollar and U.S. Treasury yields, although he is still neck and

neck with Vice President Kamala Harris in several polls.

Trump's plan to implement tax cuts, looser financial

regulations, and higher tariffs are seen as inflationary and

could slow the Federal Reserve in its policy easing path.

In cryptocurrencies, leading token bitcoin last

fetched about $72,260, after pushing as high as $73,609.88 on

Tuesday.

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