Euro rises from near 3-month low before ECB; Aussie jumps. After U.S. inflation data failed to change thoughts for a Federal Reserve pause next week, the focus moved to the next rate-setting meeting of the European Central Bank on Thursday, which helped the euro pull away from a level that was nearing its lowest point against the U.S. dollar in over three months.

The United States dollar lost some of the support it had been receiving due to a drop in the rates on long-term Treasury securities. This resulted in a strengthening of the Japanese yen.

Traders struggled to determine what the labor market statistics indicated for the outlook for interest rates, which caused the Australian dollar to rise, retreat, and rise again.

The U.S. dollar index, which measures the currency against a basket of six developed-market counterparts, including the euro and the yen, inched 0.16 percent down to 104.56 in the middle of the Asian trading day.

The low point for the euro this week was $1.0686, which has steadily climbed since then. The euro gained 0.21% today, reaching $1.07515.

The dollar’s value decreased by 0.22%, reaching 147.105 yen, moving farther away from its top of 147.875 yen the previous week.

During trading on Thursday, the benchmark yield on 10-year Treasury notes decreased by an additional 1.3 basis points (bps), bringing it down to about 4.235%. This extends a loss of 1.6 bps from the previous session, during which it reached a three-week high of 4.352% at one point.

According to the announcement made by the Labor Department on Wednesday, the consumer price index (CPI) for the United States rose by 0.6% in the previous month, marking the highest jump since June 2022. However, core inflation, which excludes changes in the cost of food and energy and is of more concern to the Federal Reserve, decreased to a year-over-year rate of 4.3% in August from a rate of 4.7% in the previous month.

According to the pricing of the money market, investors continue to have a high level of confidence that the Fed will maintain the status quo about interest rates on September 20. However, the odds of a quarter-point hike by the end of the year remain at around 40%.

In the meantime, wagers on a rate hike by the ECB later on Thursday stand at approximately 60% probability, up from closer to a coin toss earlier in the week. This was partially bolstered by a Reuters report that Europe’s central bank expects inflation to stay above 3% next year in its updated forecasts, far exceeding the 2% target. Inflation is expected to stay above 3% in its updated forecasts next year, far exceeding the target.

According to James Kniveton, a senior corporate foreign-exchange dealer at Convera in Melbourne, the Federal Reserve’s meeting in November will be “a pivotal event,” with a run-up in crude oil prices adding to the possibility of another raise, perhaps buoying the dollar. Kniveton made these comments because crude oil prices have been on an upward trend recently.

“It is premature to assert that USD bears have assumed control,” he added. “USD bulls still have some work to do.”

At the same time, he said that an increase in interest rates by the ECB “could potentially catalyze a shift in momentum, relegating the dollar to a secondary position as the euro gains traction.”

Meanwhile, the Australian dollar increased by as much as 0.54% to a high of $0.64545, its best level since September 5, as data indicated that the economy generated 64,900 jobs in August, above the consensus estimate.

However, 62,100 of those employed were part-time, which led to a quick reversal of all those gains. Consequently, the total number of jobs has decreased.

But by the afternoon in Asia, the euro had inched its way higher and was trading at $0.64425—a gain of 0.33%.