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." <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Rae Wee; Editing by Bradley Perrett and Kim Coghill)
By Rae Wee and Kevin Buckland
SINGAPORE, March 10 (Reuters) - The yen weakened after
the Bank of Japan kept stimulus settings steady on Friday, while
a rise in U.S. jobless claims halted the dollar's ascent.
The yen slid more than 0.6% in a knee-jerk plunge
after the BOJ kept policy unchanged in Governor Haruhiko
Kuroda's last policy meeting before he steps down in April. It
later recouped some of those losses and was last roughly 0.4%
lower at 136.66 per dollar.
While the decision was expected by most market watchers,
many see the days of the BOJ's bond yield curve control (YCC) as
numbered, which led to some pricing in a slim chance of a policy
tweak at Kuroda's last policy meeting.
The dollar/yen's "sharp rebound post-decision was a
reflection of the bets markets were putting up hoping for a
parting surprise from outgoing Governor Kuroda," said analysts
at OCBC.
"We still expect BoJ to proceed with policy normalisation at
some stage amid higher pressure on prices and wages."
Elsewhere, the U.S. dollar unwound some of its gains from
earlier in the week, though remained not too far off multi-month
highs against some of its major peers.
Against the dollar, the euro was last 0.05% higher
at $1.0587, after having hit a two-month low on Wednesday.
Sterling slipped 0.01% to $1.1926, while the kiwi fell 0.02% to $0.6101, languishing near Wednesday's
more than three-month low of $0.60855.
Thursday data showed that the number of Americans filing new
claims for unemployment benefits had increased by the most in
five months last week. That caused the greenback to pause its
sharp rally as traders unwound some bets that U.S. rates would
rise much higher than previously expected.
Futures pricing now implies a roughly 52% chance that the
Fed will raise rates by 50 basis points this month, compared
with 70% before the data release. U.S. rates are meanwhile
expected to peak just below 5.5% by July. Earlier in the week, the greenback surged after Fed Chair
Jerome Powell struck a more hawkish tone than markets had
expected at his semi-annual testimony before the Senate Banking
Committee. Against a basket of currencies, the U.S. dollar index was little changed at 105.26, but remained on track for a weekly
gain of roughly 0.7%.
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