The dollar index .DXY fell 0.2 percent on Tuesday.
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Hiring slowed last month while USA service industries expanded at the weakest pace in six years, joining manufacturers in an abrupt deceleration.
After surging last week on speculation of a rate hike this month, the data out of Washington has doused those hopes, analysts said, while a rise this year could now be in question.
So if you, like Hatzius, believe the Fed should and will raise rates next month, expect Fed officials to start taking to the podiums and airwaves in force this week to try to convince markets they mean business.
“Recent hawkish comments from Fed officials were probably meant to warn markets against being too complacent about the chance of a rate hike, rather than to make markets fully price in a rate hike”, Mr Shirota said. Despite the upbeat rhetoric from the Fed, Morgan Stanley analysts do not expect the Fed to hike at all this year as the USA economy is expected to slow down from here.
The dollar bought 101.30 yen in Tokyo, down from 101.99 yen in NY and well off the 103.61 yen in Asia earlier Tuesday.
The Australian dollar took a breather.
Williams repeated his view that the neutral rate of interest – the one that neither stokes nor slows growth – has probably fallen.
“The trifecta of bad ISM manufacturing and non-manufacturing PMIs and weaker-than-expected non-farm payrolls have left the quixotic calls for a September rate hike dead in the water”, Angus Nicholson, a market analyst in Melbourne at IG Ltd., said in an e-mail to clients. “It left a lot of people guessing”. Spectra Energy rallied 13 percent to a two-year high after agreeing to a $28 billion stock-for-stock transaction with Enbridge Inc. Spectra jumped 13.4 per cent to $US41 ($A53).
Elsewhere, European and United Kingdom stock markets were slightly higher in choppy mid-morning trade Wednesday, as investors looked ahead to the European Central Bank’s policy decision on Thursday.
The Stoxx Europe 600 index erased gains after the USA economic report.
The dollar fell to a more than one-week low against the yen on Wednesday after a report from the Sankei newspaper that Bank of Japan policymakers are divided ahead of the central bank’s next meeting.
Banks, for whom rock-bottom interest rates promise tough times, initially fell before turning slightly positive.
Gold for December delivery was recently up 1.3% at $1,344.50 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest level since August 26.
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Meanwhile, oil prices were up around 1% early on Wednesday, as sentiment got a boost after Iran signaled it was prepared to work with Saudi Arabia and Russian Federation to prop up the market. “The Saudi oil minister actually talked the market lower, which is going to cost his country billions”.
