**Yen Weakness Persists Amid BOJ Policy and U.S. Data Focus**

*By Brigid Riley*

**TOKYO (Reuters)** – The Japanese yen continues to face significant downward pressure on Thursday, following the Bank of Japan’s (BOJ) decision to maintain its ultra-low interest rates. Meanwhile, the U.S. dollar is consolidating as traders await crucial jobs data later this week and the upcoming presidential election in the United States.

In October, the yen has experienced a steep decline, falling over 6% and on track for its largest monthly loss against the dollar since November 2016. This weakness is exacerbated by the strength of U.S. Treasury yields, which remain near their highest levels since July.

The recent political developments in Japan have contributed to the yen’s struggles, adding to uncertainties regarding future fiscal and monetary policies. The BOJ’s decision to hold interest rates steady signals its commitment to a cautious approach, indicating inflation is expected to remain around the 2% target for the foreseeable future. Market participants are watching closely for BOJ Governor Kazuo Ueda’s briefing for insights on potential interest rate hikes before the year ends.

Currently, the yen is trading at 153.34 against the dollar, relatively unchanged after the BOJ’s announcement but close to a three-month low of 153.885 hit earlier in the week. As Sean Teo, a sales trader at Saxo, points out, any potential recovery in the yen will likely rely on a general weakening of the U.S. dollar, particularly if interest rates start to converge.

Traders are advised to remain cautious with the yen’s decline; excessive weakening could prompt intervention from Japanese authorities.

**China’s Economic Indicators and Market Reactions**

Investors received additional insights into the Asian markets with the release of China’s manufacturing PMI, which unexpectedly expanded for the first time in six months, rising to 50.1 in October from 49.8 in September. This figure, exceeding the anticipated 49.9, signals a potential stabilization in Chinese economic activity. The offshore yuan remained steady, last quoted at 7.1309.

**U.S. Jobs Data on the Horizon**

Looking ahead, Friday’s release of U.S. nonfarm payroll numbers will be a key data point as the market prepares for the presidential election on Tuesday. The political landscape remains competitive, with Republican candidate Donald Trump closely contesting Vice President Kamala Harris in several polls.

In terms of dollar performance, the dollar index increased by 0.08% to 104.17 after experiencing slight weakness the day before. It reached a peak of 104.63 on Tuesday, the highest since July 30. Analysts at Westpac suggest that recent economic data has reinforced the strength of the U.S. economy, supporting current market pricing without providing new momentum for further appreciation.

U.S. private payrolls showed robust growth in October, alleviating concerns over disruptions from recent hurricanes and labor strikes. Additionally, economic growth data for the third quarter indicated a 2.8% annualized rate, slightly below expectations of 3%.

The euro dipped 0.06% to $1.0849 after peaking at $1.0871 on Wednesday. This follows stronger-than-expected regional inflation data and eurozone GDP, prompting a reevaluation of expectations for potential rate cuts by the European Central Bank in December.

**Currency Watch**

The British pound traded at $1.29445, down 0.13%, while the Australian dollar fell 0.02% to $0.6573 following disappointing retail sales figures for September, which rose only 0.1% compared to an anticipated increase of 0.3%. Conversely, the New Zealand dollar gained a slight 0.04%, trading at $0.5974.

In summary, forex traders should be vigilant in monitoring economic indicators and geopolitical events that could impact currency valuations. Continued attention to U.S. labor data and BOJ policies will be crucial in navigating the current market landscape.

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