By Laura Matthews
NEW YORK (Reuters) -The dollar hit three-month highs against the yen on Tuesday, but was little changed on the day against most major currencies as traders bid their time ahead of next week’s US election and a slew of incoming economic data.
The loss of a parliamentary majority for Japan’s ruling coalition in weekend elections muddied the political and monetary picture, and has been weighing on the yen.
The dollar was last up 0.12% on the day at 153.47 yen. The BOJ announces its monetary policy decision on Thursday, and is widely expected to leave rates unchanged.
This week’s data slate includes the September US core personal consumption expenditures price index – the Fed’s preferred measure of inflation – on Thursday, as well as a flurry of jobs reports.
Still, the dollar is heading for its largest monthly rise against a basket of major currencies in 2-1/2 years and holding near three-month highs ahead of data that could determine the path for Federal Reserve policy.
US Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, showed job openings fell to a more than 3-1/2 years low in September and data for the prior month was revised down, a sign of a continually cooling labor market.
Meanwhile, US consumer confidence increased to a nine-month high in October as perceptions of the labor market improved.
“We’re still seeing the same pattern of a slowdown in jobs that has been the overall theme for the last few months, even if September’s (nonfarm payroll) number was well above expectations,” said Helen Given, associate director of trading at Monex USA.
She said, however, she thought any downside for the dollar remained limited, given the inherent risk of the Nov. 5 election and Fed meetings the week after next.
Recent data have highlighted the resilience of the US economy, which, together with mounting market bets of a win by Republican candidate Donald Trump over his Democratic rival Kamala Harris in the election, have underpinned the dollar and pushed up Treasury yields.
The dollar index has risen 3.6% so far in October, marking its best monthly performance since April 2022. It was last seen at 104.34 and is up this year against every major currency except the pound.
“We’re hostage to the elections,” said Marvin Loh, senior global market strategist, at State Street in Boston. “We’re still expecting a fairly tight race just as everybody has been saying for quite some time.”
COUNTDOWN TO BUDGET
Sterling edged up 0.26% to 1.3006 ahead of the Labor government’s first budget.
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