By Vidya Ranganathan
In the world of finance, the dollar's rally continues as Japan's yen falls to its lowest level in nearly two months. This comes as a result of Friday's strong U.S. jobs data and escalating tensions in the Middle East. The yen fell marginally to 149.10, its weakest level since Aug. 16, following a more than 4% decline last week, the largest weekly drop since early 2009.
The dollar's gains were fueled by a U.S. jobs report showing a significant increase in jobs in September, a decrease in the unemployment rate, and solid wage growth. This led to a reduction in market expectations for Federal Reserve rate cuts.
Amidst geopolitical tensions in the Middle East, Israel launched attacks on Hezbollah targets in Lebanon and the Gaza Strip, further heightening the conflict. Oil futures were down 0.7% on Monday but saw an over 8% increase last week, the largest weekly gain since early 2023.
The market measure against major rivals was stable, with the euro standing at $1.0970, down 0.06%. The yen's underperformance can also be attributed to comments from Japan's new prime minister, Shigeru Ishiba, hinting at delayed rate hikes.
Market expectations for a Federal Reserve rate cut have shifted dramatically, with a 95% chance of a quarter-point cut in November. Sterling was also flat around $1.3122, after a 1.9% drop last week, its biggest decline since early 2023.
Overall, the current financial landscape is influenced by strong U.S. economic data, geopolitical tensions in the Middle East, and central bank policies. Investors should keep a close eye on these factors to make informed decisions about their investments and financial planning.