Dollar holds, yen gains as equity rout saps risk appetite ahead of payrolls
TLT•The dollar was roughly flat while the yen rose as a selloff in U.S. equities drove investors toward haven assets and pushed Treasury yields lower ahead of the U.S. payrolls report. The 10-year Treasury yield was 4.84%, and futures put the chance of a December Fed rate hike at around 70%, down from more than 80% on Wednesday.
1. Investors seek havens
The dollar held steady against major currencies on Friday after a sharp U.S. equity selloff prompted investors to move into bonds and haven currencies. The yen rose 0.2% to a one-week high of 157.40 per dollar before giving back some gains, while the dollar index was roughly flat at 101.55.
2. Yields fall ahead of payrolls
The 10-year Treasury yield was last at 4.84%, near its lowest level since September 10, while the two-year yield fell about 10 basis points overnight to 4.47%. Fed funds futures put the probability of a 25-basis-point rate hike in December at around 70%, down from more than 80% on Wednesday. Investors were looking to Friday's non-farm payrolls report for clues on the Fed's rate path; weekly initial jobless claims had fallen by 6,000 to 189,000, matching a 57-year low.
