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[1/3] Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 26, 2023. "It has all the hallmarks of intervention in all honesty," said Michael Brown, market analyst at Trader X in London. The dollar fell 0.71% to 149.165 yen hovered near break-even against the euro . The yen is a particular casualty of the dollar's march to 10-month highs and the rise in Treasury yields, given a yawning gap between U.S. and Japanese interest rates. Gold prices languished near a seven-month low, weighed down by a robust dollar and elevated bond yields as the likelihood of U.S. rates staying higher for longer dominated sentiment.

Persons: Brendan McDermid, Michael Brown, Ronald Temple, Raphael Bostic, Bostic, Shunichi Suzuki, Suzuki, Brent, Ankur Banerjee, Jamie Freed, Susan Fenton, Jan Harvey, Deepa Babington, Cynthia Osterman Organizations: New York Stock Exchange, REUTERS, Global, Federal Reserve, Trader, Labor, Survey, Lazard, U.S, Dow Jones, Nasdaq, Atlanta Fed, Thomson Locations: New York City, U.S, London, New York, Japan, Singapore

A jump in the number of people working part-time for economic reasons also suggested a weaker labor market, but the pace of job growth remains strong and with inflation still double the Fed's target rate, a rate hike this month is likely. "The Fed is being hawkish and that prevents the dollar from depreciating too much. After the jobs data, futures pointed to an 88.8% probability that the Fed hikes in three weeks. Adding a tailwind to the rally in the yen was some position-squaring among speculators, who have built up sizeable bearish positions, Hardman said. The Australian dollar rose 0.8% to $0.6681, but it is still battered by weak Chinese economic data and broad risk aversion.

Persons: Joe Manimbo, We're, Thierry Wizman, They've, Lee Hardman, Hardman, YEN, Herbert Lash, Amanda Cooper, Rae Wee, Sam Holmes, Mark Potter, Barbara Lewis, Marguerita Choy Organizations: Federal Reserves, Labor Department, Treasury, ECB, Strong U.S, Bank of Japan, Thomson Locations: U.S, Japan, New York, London, Singapore

The dollar remained relatively weaker against most of its major peers, even as the dollar index rose 0.059% and the euro fell 0.15% to $1.1002. Friday's robust U.S. payrolls report prompted investors to dial back their expectations for the timing and size of the Fed's first interest rate cut. The two-year Treasury yield, which typically moves in step with interest rate expectations, rose a touch above 4.0%. The dollar rose 0.18% against the yen. Bullion regained ground after a sharp retreat in the previous session, ahead of the inflation data that could shed light on the outlook for U.S. interest rates.

In Europe, the broad pan-regional STOXX 600 index (.STOXX) rose 0.34% on expectations non-U.S. stocks will outperform in the months ahead. Sterling , which has gained 4.4% against the dollar this year, earlier hit a 12-month high of 1.2668 ahead of an expected Bank of England rate increase on Thursday. The dollar rose 0.01% against the yen. "The survey should point to further broad-based tightening in bank lending standards," said Bruce Kasman, head of economic research at JPMorgan. Bullion regained ground after a sharp retreat in the previous session, ahead of the inflation data that could shed light on the outlook for U.S. interest rates.

US inflation, Fed rates and marketsU.S. stocks ended sharply higher on optimism the Fed could be nearing the end of its aggressive rate hiking cycle. The yield on two-year Treasuries , which reflect the outlook on interest rates, rose 0.5 basis point to 3.977% and 3.3 basis points to 3.454% on 10-year notes . "That's why we do not have those dramatic moves in U.S. Treasuries on the back of better-than-expected inflation data." The dollar index fell 0.5% to its lowest level in more than two months, while the yen strengthened 0.29% to 132.74 per dollar. The Aussie dollar rose 1.0% on the back of surprise surges in both Chinese exports, which rose 14.8% compared with last March, and domestic Australian jobs.

[1/2] The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 10, 2023. Futures also showed expectations rose of the Fed cutting rates noticeably in September, and more deeper by December. "The way we've been trading over the last sessions indicates that the market is more positively positioned with regards to their exposure to Treasuries," Skiba said. The dollar index fell 0.48%, at its lowest in two months, while the yen strengthened 0.55% at 132.41 per dollar. The Aussie dollar rose 1.0% on the back of surprise surges in both Chinese exports, which rose 14.8% compared with last March, and domestic Australian jobs.

Two-year yields have risen from a seven-month intraday low of 3.555% last Friday as Treasuries rallied on safe-haven buying. "Some of the banks there were in the spotlight, their stock prices are starting to at least stabilize," said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in Charlotte, North Carolina. The U.S. regional KBW bank index (.BKX) has tumbled about 25% this month, but has gained about 3.8% this week as tensions eased. Worries over inflation have prompted investors to reassess their expectations for monetary policy from a number of major central banks, including the Fed and European Central Bank. Oil edged lower in choppy trading as investors looked to pocket profits from two straight days of gains, and as markets debated supply tightness.

Credit Suisse fell 8% in Europe and First Republic tumbled 30%. Banking troubles revived memories of the 2008 financial crisis, when dozens of institutions failed or were bailed out with billions of dollars of government and central bank money. Earlier this week, the franc plunged the most against the dollar in one day since 2015, when the Swiss central bank loosened its currency peg. Japan's Ministry of Finance, Financial Services Agency and Bank of Japan officials met on Friday evening to discuss financial markets. Masato Kanda, vice finance minister for international affairs, told reporters after the trilateral meeting that the government, the central bank and the banking watchdog would coordinate to ensure the stability of the financial system.

Government bonds, which typically perform well when there is a dash for safe havens, sold off under intense pressure. The dollar rose to an almost one-month high of 132.85 yen while the euro fell 0.64% to $1.0726. Chinese equities fell on Monday, while the offshore yuan touched a one-month low against the dollar. European Central Bank and Bank of England policymakers will also be making appearances. Gold edged higher, with investors banking on the precious metal's safe-haven appeal as concerns about an economic slowdown linger.

"The softer inflation data took some wind out of the dollar's sails," said Joe Manimbo, senior market analyst at Convera in Washington. "The dollar is steadier because we're having this residual, geopolitical skittishness as well as signs of a fairly sturdy U.S. economic backbone in the forms of U.S. retail sales." Retail sales rose 1.3% in October, more than the 1.0% increase that economists polled by Reuters had forecast. The dollar briefly pared losses on release of the retail sales data, but later fell against the euro to trade little changed against major currencies. Yields fell further on the market's benign inflation outlook.

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