By Rae Wee
SINGAPORE, March 10 (Reuters) - The dollar paused its
ascent on Friday after a rise in jobless claims in the United
States implied possibly easing conditions in the labour market
and tempered expectations of further aggressive rate hikes from
the Federal Reserve.
In Asia, moves were subdued as markets remained on guard
ahead of the Bank of Japan's (BOJ) monetary policy decision at
the conclusion of a policy meeting, the last to be chaired by
incumbent BOJ Governor Haruhiko Kuroda before he steps down in
April.
The yen held steady in early Asia trade, and was
last 0.2% higher at 135.89 per dollar, retreating from a nearly
three-month low hit earlier in the week.
The BOJ is widely expected to maintain ultra-low
interest rates on Friday and refrain from major changes to its
controversial bond-yield control policy, leaving options open
ahead of a leadership transition in April.
"In theory, it should be a non-event, but there is a
non-zero chance that Kuroda goes out with a bang and alters
yield curve control," said Chris Weston, head of research at
Pepperstone.
The yen has come under downward pressure again in recent
weeks as the BOJ has remained ultra dovish, while interest rate
expectations in the United States have ramped up.
That has caused the yen to weaken from January highs, and
reversing a rally that followed a surprise tweak to yield curve
control by the BOJ in December.
Elsewhere, the U.S. dollar slipped marginally on Friday.
The euro rose 0.13% to $1.0595, while sterling edged 0.05% higher to $1.1932, both some distance from
multi-month lows hit on Wednesday.
The kiwi gained 0.07% to $0.6106, but the Aussie slipped 0.13% to $0.6582.
Data released on Thursday showed that the number of
Americans filing new claims for unemployment benefits increased
by the most in five months last week, though the underlying
trend remained consistent with a tight labor market.
Nonetheless, the jump in jobless claims was enough to cause
traders to unwind some bets that U.S. rates would rise much
higher than previously expected. Futures pricing now implies a
roughly 54% chance that the Fed will raise rates by 50 basis
points this month, compared with 70% before the data release. The Fed funds rate is projected to peak just below 5.5% by
July.
Against a basket of currencies, the U.S. dollar index fell 0.12% to 105.12 but remained on track for a weekly gain of
nearly 0.6%. It surged earlier in the week after Fed Chair
Jerome Powell struck a more hawkish tone than markets had
expected at his semi-annual testimony before the Senate Banking
Committee. Focus now turns to the closely watched nonfarm payrolls
report due later on Friday, the next major data point that could
offer clues on the Fed's next steps for monetary policy.
According to a Reuters survey of economists, nonfarm
payrolls likely increased by 205,000 jobs in February after
surging by 517,000 in January.
"The payrolls report has surprised us on the high side for,
I think, about 10 straight months now, so it's been a sign of
real strength for the U.S. economy," said Jarrod Kerr, chief
economist at Kiwibank.
"It is a little frustrating for the Fed. They've obviously
tightened a lot, hoping it'll have an effect. But we've seen
bounce back in a lot of activities indicators in recent months.
So it looks like the job's not done."
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(Reporting by Rae Wee; Editing by Bradley Perrett)
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