Investing in Currencies

Dollar falls as record Japanese bond auction lifts yen, pound surges on jobs data


Investing.com — The U.S. dollar slipped on Tuesday, as oil prices reversed course and eased some inflationary concerns. The greenback’s move was also largely due to a climb in the euro and the yen and a surge in the sterling.

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At 14:30 ET (18:30 GMT), the U.S. dollar index, which tracks the world’s premier currency against a basket of six major peers, shed 0.3% to 101.71.

Oil prices turn lower

Global crude prices had initially risen on Tuesday, adding to general concerns that central banks would need to hike interest rates to deal with oil-linked price pressures. Stronger rate environments generally tend to strengthen the dollar.

But oil slipped into negative territory, with Brent crude futures, the global benchmark, last down 0.8% to $108.66 a barrel. The fall came after The New Arab reported that Qatar and Pakistan had offered a “middle ground” plan to the U.S. and Iran that met the demands of both sides, citing sources familiar with the mediation efforts.

The proposal offers around $6 billion in frozen Iranian funds in Qatari banks as a “partial response” to Tehran’s demands to unfreeze assets, The New Arab said. The proposal also includes Iran apparently agreeing to secret visits by the International Atomic Energy Agency to its nuclear sites, The New Arab added.

According to Thierry Wizman, global FX and rates strategist at Macquarie, central banks across the world were seeing a difference in terms of how much focus they give to oil prices.

“The past few days’ rise in crude oil prices seems to have reignited or cemented expectations for rate hikes at the (Bank of England) and (Bank of Canada), which are more removed from trends in the U.S. and the Euro area,” he said.

“That divergence between central banks that are focusing on energy prices (the BOE and BOC) and those that aren’t as much (the Fed, the ECB, the RBA) has already favored some currencies over others. The GBP has rallied strongly over the EUR during October, and EUR/GBP has dropped from 0.85 to 0.84 so far this month,” Wizman noted, referring to the European Central Bank and the Reserve Bank of Australia.

Record-breaking Japanese bond sale triggers yen surge

Turning to other major currencies, over in Asia, the Japanese yen firmed to 158.17 per dollar.

The move came after investors showed unprecedented demand for a 20-year Japanese government bond sale. The auction drew a record bid-to-cover ratio of 5.84 times the amount offered, as per Reuters – the highest bid ratio ever since the 20-year maturity was introduced in 1987.

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The massive demand surge sent Japan’s 20-year yield down 4.7 basis points to 3.726%.

Euro climbs as French unrest eases and budget vote looms

Moving to Europe, the euro stabilized after touching its lowest levels since May 2025 last week, with the single currency last up 0.2% to $1.1234.

Social turmoil across France showed signs of temporary moderation overnight after authorities enforced strict municipal curfews across Paris, Nice, and several major urban centers following days of violent anti-government protests.

Despite the temporary lull on the streets, French sovereign risk remains a primary overhang for the euro. The spread between French 10-year OATs and benchmark German Bunds hit over 150 basis points, reflecting persistent institutional skepticism over Paris’s public finances.

Foreign exchange desks are closely watching France’s lower house of parliament as lawmakers prepare to vote on the revenue section of the proposed 2027 budget – a key test for President Emmanuel Macron’s administration as it seeks to reign in a 5.4% GDP budget deficit.

Sterling jumps as mixed labor report adds to hike expectations

Elsewhere in Europe, the sterling added 0.6% to $1.3380. The move came after mixed jobs data hinted at rate hikes from the Bank of England (BOE).

As per the Office for National Statistics, British unemployment fell more than expected to 4.7% in the three months to August, but job vacancies dropped to their lowest since 2014 outside the pandemic and total pay growth cooled.

HM Revenue and Customs data showed the number of payrolled employees fell by 111,000, or 0.4%, between August 2025 and August 2026, but was largely unchanged between July and August, rising by 1,000.

“For the (BOE’s Monetary Policy Committee)…today’s data will speak to a labour market that has less slack than previously envisaged. The case for insurance hikes, in our minds, is growing especially with CPI on course to top 4% in the coming months. And unless we get a big miss in tomorrow’s inflation report, a November hike looks all the more likely,” Sanjay Raja, chief UK economist at Deutsche Bank, said.

Roushni Nair and Pranav Kashyap contributed to this article

Original Article

Dollar falls as record Japanese bond auction lifts yen, pound surges on jobs data

Short-end U.S. yields edge up as investors digest French unrest

Sterling today: Pound edges up as dollar consolidates



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