USD/JPY Nears 118 over U.S. Labor Market Concerns

The yen rose toward its highest level since December versus the dollar as concern lingered that the U.S. labor market is too weak for the Federal Reserve to start raising interest rates.

The dollar retreated from near multi-year highs against the Aussie and euro as traders weighed a U.S. jobs report showing incomes declined in December. Speculators boosted wagers on the U.S. currency versus eight of its major peers to a record high before the U.S. releases consumer-price data Jan. 16. The euro touched a nine-year low versus the greenback last week and today slipped to its weakest since October against the yen as an official said European Central Bank policy makers met to discuss government-bond purchases.

“The market’s confidence that the Fed’s lift-off will take place near mid-year has been shaken,” analysts led by Marc Chandler, global head of currency strategies in New York at Brown Brothers Harriman & Co., wrote in a note to clients. “In the week ahead, softer retail sales and inflation gauges will likely favor the doves and weigh on the dollar.”


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