Hideyuki Sao

TOKYO, Reuters – On Monday the dollar rose to a two-and-a-half-year high against the yen after a weak U.S. payrolls report did not change market expectations. The U.S. Federal Reserve announced that it would begin tapering massive bond-buying in the next month.

With nonfarm payrolls rising 194,000 in September, the U.S. created the fewest job in nine months. That’s way lower than economists expected of 500,000.

Despite this, August data was sharply revised while the unemployment rate fell to 4.8% after people left the workforce. Also, the average hourly earning also increased by 0.6% from 0.4% August.

Overall, however, there remains the threat of a shortage in labour force. It keeps worries about inflation alive, and gives the Federal Reserve justification for continuing to reduce its stimulus that it initiated last year for pandemic relief.

U.S. bonds yields rose in response to the data. The benchmark 10-year Treasuries yield hit a four month high of 1.617%. This increased the dollar’s appeal for yields.

The most sensitive yen to yield differentials is the yen. It reacted by falling to as low at 112.32 Japanese yen per $1, which was last seen in April 2019.

Shinichiro Kasota (senior FX strategist) stated that although the headline payroll figures were weak, if you dig deeper, there’s no reason to believe the Fed will not taper next month. Barclays (LON:

The dollar/yen has reached the highest point of its trading range at 112.40 in 2019, so there is heavy selling. “We could still see the dollar climbing to 113 or even 114 handle if it breaches that level,” he said.

The euro fell to $1.1575. It was a little above the Wednesday low of $1.1529 on Wednesday, making it its weakest point since July 2011.

It was 94.09 at the time, which is not too far away from 94.504 earlier in this month.

Analysts believe that the U.S. currency may gain more if U.S. consumer prices data on Wednesday indicate an inflation increase and raise expectations for a quicker rate rise next year.

Inflation concerns do not just concern the United States. Supply disruptions, rising commodity prices, and other factors have also affected many countries.

British pounds held steady at $1.3623. This was a continuation of its recovery from the nine-month low it reached late last month. Its strength is due to growing expectation that Bank of England will raise interest rates to stem soaring inflation.

C$1.2473 was the Canadian currency. It had reached a 2-month high of C$1.24525 Friday, thanks to strong Canadian payroll data and high oil prices.

Other currencies were also affected by the change at 6.4438 Dollar, an increase from its Oct. 1, high of 6.4286.

Bitcoin was steady at $54,782. It had hit a 5-month high of $56,561 Sunday. Ethereum is soft at $3,456.