Weaker Payroll Report Sends Dollar Plummeting Amid Rising Inflation Expectations
The dollar index DXY declined by -0.32% on Wednesday due to a weaker-than-expected US September payroll report. The report showed that non-farm payrolls rose by +29,000, below expectations of +90,000, and the unemployment rate unexpectedly rose by +0.1% to 4.2%. This reduced the chance of a Federal Reserve rate hike later this month.
The weaker-than-expected US September payroll report also weighed on the dollar. The Fed's target range needs to rise an additional 50 basis points or more, according to Dallas Fed President Lorie Logan, who said that the outlook and risks for their dual mandate goals need to be balanced.
The yen rose against the dollar due to a stronger-than-expected Tokyo September CPI report. The report showed a +2.7% y/y increase in Tokyo CPI, exceeding expectations of +2.5%. This is the fastest pace of increase in 10 months. Japan's prime minister and finance minister, along with the US, have recently sent a 'very clear' message about the yen's depreciation.