Dollar Steady Ahead of Payrolls as Yen Firms on Hot Tokyo Inflation
The US dollar held steady near multi-month peaks on Friday as investors awaited the crucial September nonfarm payrolls report. The greenback remained on track for a third consecutive week of gains, with a 1% weekly advance putting it within reach.
Despite some weakness in the dollar index and futures, the US currency was underpinned by signs of economic resilience that give the Federal Reserve leeway to maintain a hawkish stance. Recent PCE data showed a slight cooling, but core inflation remains above the Fed's 2% target, heightening expectations for further rate increases.
The yen gained ground against the dollar, sending the dollar/yen pair down nearly 0.2%, due to hot Tokyo inflation readings that rose to their highest levels since November 2025. The Japanese sovereign debt market saw buying triggered by prospects of further rate increases, with the benchmark falling 1.25%.
The euro zone's headline inflation jumped to 3.8% in September, topping expectations for 3.6%, driven primarily by natural gas and fuel costs. Core inflation remained contained at 2.5%, but the sharp acceleration presents a complex picture, strengthening hawkish calls for further rate hikes.