The yen held weaker in Asia on Monday as safe haven flows ebbed following news that the FBI stood by its earlier recommendation that no criminal charges were warranted against Democrat Hillary Clinton for using a private email server and after Japan wages data and Bank of Japan minutes set an easier tone.
USD/JPY changed hands at 104.13, up 1.03%, while AUD/USD rebounded to 0.7681, up 0.08%.
The BoJ said Monday that several board members want a push to increase inflation expectations in a sustainable way, according to minutes of the September meeting. As well, Japan reported average wages rose 0.2% as expected in September, the first rise in two months, but much slower than the increase in corporate profits. Firms are reluctant to raise wages amid uncertainty over global and domestic growth.
News that FBI had made the statement lifted a cloud over Clinton's presidential campaign two days before the U.S. election and possibly blunted momentum for rival Donald Trump.
As well, Federal Reserve Vice Chairman Stanley Fischer said Friday that the labor market continues to recover robustly despite a variety of negative shocks and now verges on full employment, aiding strong dollar sentiment.
The U.S. economy added 161,000 payroll jobs in October for an average increase of 181,000 per month this year, slower than last year's 229,000 pace, but enough to keep the unemployment rate at around 5%.
"The labor market has, by and large, had a pretty good year," Fischer said in a speech prepared for the International Monetary Fund's annual research conference. "This recovery has been and continues to be powerful in terms of one of our two main targets -- employment -- and it is my view that the labor market is close to full employment."
On Monday, the AIG construction index fell 5.5 points to 45.9, a 20-month low. "While the falls in residential building activity are coming from high levels further easing is indicated by further falls in new orders in October. There is clearly scope for an increase in infrastructure spending to help offset the unwinding of the big mining- and energy-sector projects and the retreat of residential activity," AI head of policy Peter Burn said.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, jumped 0.51% to 97.43.
In the coming week, trade and inflation data out of China will be watched for indications on the strength of the world’s number-two economy is performing. China's current account surplus rose to $71.2 billion in the third quarter, the State Administration of Foreign Exchange (SAFE) announced Friday.
Last week, the dollar slid against a basket of the other major currencies on Friday as investors remained on edge ahead of the upcoming U.S. presidential elections, despite the solid U.S. employment report for October.
Investors are currently pricing in a 66.8% chance of a rate hike at the Fed's December meeting; according to federal funds futures tracked Investing.com's Fed Rate Monitor Tool.
Expectations of higher rates tend to boost the dollar, as higher borrowing costs make the currency more attractive to yield seeking investors.
But analysts have warned that the U.S. central bank could hold off on hiking rates if the election outcome sparks market volatility.
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