US recap: Big JOLTS drop dulls dollar's haven bid
USD/JPY-JOLTS drop adds to derisking dive before upcoming essential US data
AUD/USD-Bulls put up a fight after JOLTS report
June 4 (Reuters) -The dollar rose on Tuesday, along with the yen, on risk aversion but the U.S. currency retreated from its highs after a plunge in JOLTS job openings added to a string of weakening U.S. data.
In the wake of the JOLTS report, EUR/USD trimmed earlier losses to 0.2%, but USD/JPY remained down 0.9% and by Tuesday's lows with Treasury yields hovering just above May's key lows versus JGB yields only modestly off their highest in well over a decade.
The yen, with JGB yields still extremely low, has been a major funding currency, thus Tuesday's derisking flows drove EUR/JPY and GBP/JPY down by 1%.
De-risking has been fanned by elections in Mexico and India that have the peso down 5.6% so far this week and the Nifty 50 Indian stock index down nearly 6% on Tuesday.
Not only was the drop in JOLTS to 8.059mn in April far below the 8.355mn forecast, but March was a revised to 8.355mn from 8.488mn. Openings have fallen 23% from a year earlier to their lowest since February 2021.
The news follows Monday's weak ISM manufacturing report, a slightly cooler monthly core PCE rise, a plunge in the Chicago PMI and the Q1 GDP revision to 1.3% from 1.6%.
The ISM non-manufacturing report is due on Wednesday and non-farm payrolls on Friday, both of which are forecast to improve -- perhaps creating more space for disappointment and dollar losses, particularly against the yen.
USD/JPY fell 0.9% after crashing through important supports. Key for the pair will be whether the upcoming U.S. data can keep 2- and 10-year Treasury yields above May's crucial low supports. That as the BoJ feels its way toward at least two rate hikes the swaps market prices in by year-end and use of JGB purchases just to keep yields from rising too fast.
EUR/USD fell 0.2% after trimming some of its earlier risk-off losses that an unexpected rise in German unemployment helped facilitate, but bund yields fell less than Treasury yields.
The ECB is widely expected to make its first rate cut at Thursday's meeting, with at least one more priced in before year-end. Futures project the first Fed cut in September and a second in December.
Sterling fell 0.15%, rebounding from Tuesday's 1.2743 low, after a second minor break above 1.2800 earlier. The BoE is not fully priced to cut rates until November.
AUD/USD and AUD/JPY fell 0.58% and 1.5%, respectively, amid the derisking.
For more click on FXBUZ
Editing by Burton Frierson
Randolph Donney is a Reuters market analyst. The views expressed are his own.
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