Yen gains 0.77% on the dollar as the dollar index slips for a second week
The euro lost 0.53% against the dollar and 0.78% against sterling, while falling Treasury yields and hotter UK inflation set up central bank decisions from Oct. 28.
- The yen gained 0.77% against the dollar from Oct. 16 to Oct. 23, our calculation from European Central Bank reference rates.
- The dollar index slipped about 0.2% to near 101.8, its second straight weekly loss, according to BabyPips and FXStreet.
- The Federal Reserve decides on Oct. 28, the European Central Bank on Oct. 29 and the Bank of Japan on Oct. 30.
The yen gained 0.77% against the dollar between Oct. 16 and Oct. 23, our calculation from European Central Bank reference rates, in the week of Oct. 19-25, as Treasury yields eased.
The dollar index slips for a second week as Treasury yields ease
BabyPips' weekly recap said the dollar index slipped about 0.2% to near 101.8. Its prices run from each market's weekly open to the Friday 4 p.m. ET close.
FXStreet said the index posted a second straight weekly loss and briefly eased toward a three-week low around 101.50 before recovering some ground.
BabyPips said the 10-year Treasury yield eased from about 5.08% to 5.00% over the week. FXStreet tied the dollar's weakness to lower yields across the curve.
FXStreet also said crude oil kept rising while the dollar did not benefit. BabyPips put WTI crude near $105.29 on Oct. 22, after a 4.2% rise that day.
The yen gains 0.77% on the dollar and 1.30% on the euro
The ECB reference rate for the yen was 175.51 per euro on Oct. 23, against 177.82 on Oct. 16, according to the ECB's yen series. That is a fall of 1.30%, our calculation: 175.51 / 177.82 - 1.
Combining the yen and dollar rates implies 156.80 yen per dollar on Oct. 23, down from 158.02 on Oct. 16. That is a fall of 0.77%, our calculation: (175.51 / 1.1193) / (177.82 / 1.1253) - 1.
The Federal Reserve's H.10 release put the Oct. 16 rate at 158.00 yen per dollar, so the starting level holds. FXStreet said the pair fell to a five-week low near 156.00.
Japan's core consumer prices rose 2.1% in September, up from 1.7% in August, investinglive reported on Oct. 23. The Bank of Japan meets on Oct. 29-30 and is widely expected to hold at 1.25%.
Governor Kazuo Ueda said underlying inflation is very close to the 2% goal, according to the same report. A later FXStreet note said stalled US-Iran talks keep safe-haven demand for the yen in play.
Sterling firms as UK inflation reaches 3.5% and markets price a November hike
The ECB reference rate for sterling was 0.83728 pounds per euro on Oct. 23, against 0.84385 on Oct. 16, according to the ECB's sterling series. That is a fall of 0.78%, our calculation: 0.83728 / 0.84385 - 1.
The implied rate for sterling was 1.3368 dollars on Oct. 23, up 0.25% from 1.3335 on Oct. 16, our calculation: (1.1193 / 0.83728) / (1.1253 / 0.84385) - 1. FXStreet put the pair above 1.3400.
UK consumer prices rose 3.5% in the 12 months to September, from 3.1% in August, the Office for National Statistics said on Oct. 21.
Citing LSEG data, Reuters put the odds of a quarter-point Bank of England hike on Nov. 5 above 90%, according to BabyPips. The Bank Rate is 3.75%.
The euro lags as euro area activity cools to a four-month low
The ECB reference rate was 1.1193 dollars per euro on Oct. 23, against 1.1253 on Oct. 16. That is a fall of 0.53%, our calculation: 1.1193 / 1.1253 - 1.
BabyPips said the Australian and Canadian dollars led the majors and the euro came last. The ECB fixing stayed below its Oct. 16 level on every working day from Oct. 19 to Oct. 23.
S&P Global's flash euro area PMI put the composite at 51.9 in October, against 53.1 in September, a four-month low. S&P Global said input cost inflation accelerated.
The ECB meets on Oct. 29, and FXStreet lists no change as the expected outcome.
The Fed minutes point to another hike, yet officials show no urgency for Oct. 28
The Fed raised its target range by a quarter point to 3.75%-4.00% in September. Most participants said another increase would likely be appropriate by year end, according to the Fed's minutes.
FXStreet said officials have signaled no urgency to hike at the Oct. 28 meeting. Markets still price roughly an 80% chance of a hike in December, according to the same report.
That is market pricing, not a Fed commitment. The Fed, the European Central Bank and the Bank of Japan all decide before Oct. 31.
The week in numbers
| Pair | Rate Oct. 23 | Week change | Source |
|---|---|---|---|
| EUR/USD (dollars per euro) | 1.1193 | -0.53% our calculation | ECB |
| EUR/GBP (pounds per euro) | 0.83728 | -0.78% our calculation | ECB |
| EUR/JPY (yen per euro) | 175.51 | -1.30% our calculation | ECB |
| USD/JPY (implied, yen per dollar) | 156.80 | -0.77% our calculation | ECB cross rate |
| GBP/USD (implied, dollars per pound) | 1.3368 | +0.25% our calculation | ECB cross rate |
| Dollar index | 101.8 | -0.2% BabyPips | BabyPips |
As of Oct. 23. ECB reference rates are fixings published each working day; week change compares Oct. 23 with Oct. 16. The dollar index change runs from the weekly open.
Central bank decisions and US data fill the days from Oct. 28 to Nov. 5
- Oct. 28: the Fed decides at 2:00 p.m. ET, with a press conference at 2:30 p.m. ET, according to the Fed calendar. FXStreet lists the Bank of Canada and the Reserve Bank of New Zealand the same day, with 25 basis point hikes expected.
- Oct. 29: the European Central Bank meets, with no change expected, and US advance third-quarter GDP and the PCE price index are due, according to FXStreet.
- Oct. 30: the Bank of Japan decides, with a hold at 1.25% widely expected, according to investinglive.
- Nov. 5: the Bank of England meets, with a quarter-point hike priced by markets, according to BabyPips.
How we reported this: We opened each linked source on Oct. 26. Weekly changes are our calculation from ECB fixings, not closes. Dollar index figures come from secondary recaps, and we cannot know how the banks will vote.