By Saqib Iqbal Ahmed and Lewis Krauskopf

NEW YORK (Reuters) - The reverberations from a blowout U.S. employment number could threaten an assortment of trades predicated on falling interest rates, if stronger-than-expected growth spurs investors to radically shift views on how much the Federal Reserve will need to cut borrowing costs in the months ahead. 

Expectations of steep rate cuts spurred bets on everything from rising Treasury prices to a weaker dollar in recent months, while juicing corners of the stock market such as utilities. The Fed delivered a jumbo-sized 50 basis-point cut last month, temporarily vindicating that view.

But the trajectory of rates is less certain after Friday’s labor market report, which showed the U.S. economy creating over 100,000 more jobs than expected last month. That suggests there is less need for more large cuts this year and raises the prospects of a reversal in many of the trades that hinged on lower rates. 

Futures tied to the fed funds rate on Friday showed traders had ruled out another 50 basis-point cut at the central bank’s November meeting. Market pricing on Thursday reflected a greater than 30% chance for such a cut, according to CME FedWatch. 

Here is a look at some corners of the market that could be affected in a rates rethink.

DOLLAR REBOUND

Net bets on a weaker dollar stood at $12.91 billion in futures markets last week, the highest level in about a year, data from the Commodity Futures Trading Commission showed, after the dollar notched its worst quarter in nearly two years.

SHANGHAI (Reuters) - China's central bank held back on buying gold for its reserves for a fifth straight month in September, official data showed on Monday, mainly due to a surge in prices for the yellow metal.

China's gold holdings stood at 72.8 million troy ounces at the end of last month. The value of the gold reserves, however, rose to $191.47 billion from $182.98 billion at the end of August.

Gold prices have risen around 28% so far this year - heading for the biggest annual gain in 14 years - underpinned by the start of U.S. Federal Reserve interest rate cuts, geopolitical tensions and robust demand from central banks.

Global central banks, which actively bought gold in 2022-2023, are on track to slow purchases in 2024 from 2023, according to the World Gold Council, but to keep them above the pre-2022 level.

This is partly due to the pause in purchases by the People's Bank of China (PBOC), which until May had bought gold for 18 consecutive months.

The central bank was the world's largest official sector buyer of gold in 2023 and its decision to put its buying on hold muted Chinese investor demand in recent months. "With higher gold prices, the PBOC continues to pause from new purchases. We believe the central bank would like more gold but is waiting for a more attractive entry point," said WisdomTree commodity strategist Nitesh Shah.

"However, with global interest rates falling and geopolitical tensions rising, it looks like they may have to wait for some time for a price dip. Given our forecast of prices rising to over $3,000/oz in the coming year, the central bank may want to consider building positions earlier."

By Kevin Buckland

TOKYO (Reuters) - Asian stocks rallied and the dollar reached a fresh seven-week peak on the yen on Monday after blowout U.S. labour data dispelled fears of a recession and spurred a sharp paring of rate-cut bets.

Short-term U.S. Treasury yields rose after the closely watched non-farm payrolls report on Friday showed the economy unexpectedly added the most jobs in six months in September.

Crude oil prices eased from a one-month peak even as Israel bombed targets in Lebanon and the Gaza Strip, with Monday marking one year since the Hamas attack that triggered the war.

Japan's Nikkei led regional equity gains with a 2% rally as of 0015 GMT, given additional momentum by the softer yen.

Australia's stock benchmark added 0.12% and South Korea's Kospi gained 0.29%.

Hong Kong's Hang Seng had yet to open, and mainland Chinese stocks remain closed until Tuesday for the Golden Week holiday.

MSCI's broadest index of Asia-Pacific shares climbed 0.4%.

U.S. Dow futures pointed 0.08% higher after the cash index closed at an all-time peak after the payrolls data on Friday.

"The reaction in markets conveys what the key themes and risks for market participants are presently: economic growth, and its impact - for equities - on future earnings," said Kyle Rodda, senior financial market analyst at Capital.com.

"There's also seemingly a revival of the U.S. economic exceptionalism trade."

The U.S. dollar pushed as high as 149.10 yen for the first time since Aug. 16 before last trading hands up 0.18% at 148.87 yen.

Japan's top currency diplomat, Atsushi Mimura, said on Monday that officials will monitor foreign exchange moves, including speculative trading.

The euro eased 0.07% to $1.0971, slipping back towards Friday's seven-week trough at $1.09515.

Bets for a super-sized 50-basis-point rate cut at the Federal Reserve's next policy announcement on Nov. 7 - which had been above 50% a week ago - were completely erased after the payrolls report.

Instead, traders now lay 95% odds on a quarter-point cut, with a small chance that the policy rate stays unchanged, according to CME Group's (NASDAQ:CME) FedWatch Tool.

The two-year U.S. Treasury yield rose 1.7 basis points to 3.9488% on Monday, the highest in more than a month.

Gold edged 0.1% lower to $2,849.29 an ounce, but remained not far from last month's record peak of $2,685.42.

Crude prices slipped following their biggest weekly gains in more than a year amid the mounting threat of a region-wide war in the Middle East.

Brent crude futures lost 65 cents to $77.40 per barrel, while U.S. West Texas Intermediate crude futures declined 53 cents to $73.85 per barrel.

Investing.com -- This week’s U.S. inflation data for September will be keenly anticipated after Friday’s stronger than expected jobs report reassured investors who had been concerned that the economy was weakening. The Federal Reserve is to publish the minutes of its September meeting, earnings season gets underway, and oil prices look set to remain volatile amid heightened geopolitical tensions. Here's your look at what's happening in markets for the week ahead.

1. U.S. CPI

Thursday’s inflation data for September is expected to show that price pressures continued to moderate at the end of the third quarter. The data, coming on the heels of Friday’s robust jobs report is likely to shape expectations around the size and pace of Fed rate cuts in the coming months.

Producer price inflation data on Friday is also expected to point to tamer inflation.

The data is likely to reassure the Fed that inflation is on a sustainable path back towards its 2% target.

The Fed kicked off its easing cycle last month with a hefty 50 basis point rate cut and Friday’s jobs report argues against the central bank delivering another outsize cut in November.

“Next week, CPI for September will be a key data release. If prices rise faster than expected on top of the stronger labor data, chances for the Fed to skip the November meeting will increase,” analysts at UBS said in a note on Friday. “Keep in mind that in the "dot plot" released following the September FOMC meeting, nearly half of the participants thought that total cuts of 50-75 bps by year-end would be appropriate, meaning only 0-25 bps of additional cuts this year.”

2. Fed minutes

The Fed is to publish the minutes of its September meeting on Wednesday with investors on the lookout for indications into how officials may be thinking about the pace of easing going forward.

Additional insights into the factors that led to policymakers reaching a consensus around the 50bps cut would also be noteworthy.

Investors will also get a chance to hear from several Fed officials during the coming week, including Neel Kashkari, Raphael Bostic, Adriana Kugler and Lorie Logan.

Meanwhile, Thursday’s report on initial jobless claims is likely to be impacted by recent weather disruptions.

3. Earnings get underway

U.S. third-quarter earnings season is about to kick into gear, in what will be a test for a stock market near record highs and trading at lofty valuations.

Major financial firms including JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) and BlackRock (NYSE:BLK) all report on Friday.

Bank results offer an important view into the economy, including the strength of demand for loans. Investors will also be on the lookout for signs of whether the Fed’s large rate cut last month is already influencing the economy through rising auto sales or the purchase of other big-ticket items.

Other companies reporting results during the week include PepsiCo (NASDAQ:PEP) and Delta Air Lines (NYSE:DAL).

Bullish investors are hoping results will justify increasingly rich valuations in the stock market. The S&P 500 is up 20% for the year so far and is trading near record highs despite recent volatility spurred by rising geopolitical tensions in the Middle East.

4. Oil prices

Oil prices rose on Friday and settled with their biggest weekly gains in over a year on the mounting threat of a region-wide war in the Middle East, although gains were limited as U.S. President Joe Biden discouraged Israel from targeting Iranian oil facilities.

Israel has sworn to strike Iran for launching a barrage of missiles at Israel last Tuesday after Israel assassinated the leader of Iran-backed Hezbollah. The events had oil analysts warning clients of the potential ramifications of a broader war in the Middle East.

On a weekly basis, Brent crude gained over 8%, the most in a week since January 2023. WTI gained 9.1% week-over-week, the most since March 2023.

Iran is a member of OPEC+ with production of around 3.2 million barrels per day or 3% of global output. The group's spare production capacity should allow other members to boost output if Iranian supplies are disrupted, limiting oil price gains.

5. RBNZ

The Reserve Bank of New Zealand meets on Wednesday and some market watchers believe it could follow the Fed's example and cut rates by half a point.

The central bank lowered the official cash rate for the first time in more than four years at its last meeting in August, a year ahead of its own projections, and RBNZ Governor Adrian Orr said he would like to deliver two more cuts by Christmas.

Meanwhile, the Reserve Bank of Australia is to publish the minutes of its September meeting on Tuesday, with market watchers on the lookout for insights on its hawkish hold. RBA Deputy Governor Andrew Hauser on the docket to speak the same day.

Investing.com -- US stock futures hover near the flatline as markets gear up for an all-important nonfarm payrolls report on Friday. The figures are expected to point to a stable, albeit decelerating, labor market picture ahead of the Federal Reserve's two remaining meetings this year. Elsewhere, dockworkers in the US East and Gulf Coasts suspend a strike that threatened to place heavy pressure on the broader economy.

1. Nonfarm payrolls loom large

Markets are focused on the publication of the September nonfarm payrolls report at 08:30 ET on Friday.

The US economy is tipped to have maintained a moderate pace of job growth during the final month of the third quarter, while the unemployment rate is seen matching August's level of 4.2%.

Should the Labor Department's key readings meet those expectations, it could lessen the need for the Federal Reserve to roll out another 50-basis point interest rate reduction at the central bank's upcoming meetings in November and December. The Fed announced a jumbo reduction in borrowing costs at its gathering last month, partly fueled by a desire to bolster the labor market.

Potentially impacting the report could be Hurricane Helene, which raced through parts of the US Southeast last week, and an ongoing strike by Boeing (NYSE:BA) workers in the US Pacific Northwest.

The figures, coupled with job openings data and private payrolls earlier this week, are broadly expected to point to a sustained and orderly slowing in labor demand underpinned by mostly steady wage growth.

2. Futures muted

US stock futures were muted on Friday as investors prepared for the release of the crucial US jobs data.

By 03:27 ET (07:27 GMT), the Dow futures contract and S&P 500 futures were both mostly unchanged, while Nasdaq 100 futures had climbed by 25 points or 0.1%.

The main indices ended the prior session slightly lower, signaling a note of caution ahead of the nonfarm payrolls report. Traders were also eyeing escalating tensions in the Middle East.

The benchmark S&P 500 dipped by 10 points or 0.2%, the 30-stock Dow Jones Industrial Average shed 185 points or 0.4%, and the tech-heavy Nasdaq Composite ticked down by 7 points or 0.04%.

In a note to clients, analysts at Vital Knowledge argued that recent stock market trends have been marked by stimulus measures from the Chinese government and a host of interest rate cuts by global central banks counterbalancing higher stock valuations.

"[T]he former [is] preventing sustained and extended slumps while the latter acts as an obstacle to further material gains," the analysts said.

"We think stimulus is ultimately the more powerful of these two countervailing forces, which will keep the equity trend pointed higher, but elevated [price to equity ratios] leave stocks exposed to negative headlines."

3. Dockworkers suspend strike

US dockworkers across the East and Gulf coasts are due to suspend their days-long strike after their union and the group representing large ocean shipping firms reached an agreement on Thursday.

The work stoppage had closed down ports from Maine to Texas, threatening large swathes of the US economy by crimping supply chains and the imports of goods like food and pharmaceuticals. Analysts at JPMorgan had said the strike cost the economy as much as $4.5 billion a day, the Financial Times reported.

The tentative deal will see a wage hike of roughly 62% over six years, Reuters reported, citing two sources familiar with the matter. The number would be between the 77% sought by the International Longshoremen's Association (ILA) workers union and the almost 50% offered by the employer group, United States Maritime Alliance (USMX).

In a statement, the ILA and the USMX said they would extend their master contract until Jan. 15 of next year. However, key issues between the two remain, including workers' concerns that automation at ports could cause job losses.

Shares in shipping companies slipped following the announcement, including AP Moller Maersk in Denmark. Investors banking on a rebound in recently depressed freight rates due to the strike were disappointed, analysts told Reuters.

4. Seven & i Holdings eyeing sale of majority stake in supermarkets - reports

Japan's Seven & i Holdings is mulling a possible sale of a majority stake in its supermarket businesses, including its flagship Ito-Yokado division, according to Nikkei business daily.

The parent company of the 7-Eleven chain of convenience stores is looking to sell the units to overseas investment funds, among other potential candidates, Nikkei reported. The process is due to begin as early as the end of this year, it added.

A Seven & i spokesperson quoted by Reuters said the move is "not something officially announced by our company," noting there are "no facts that have been decided at this time."

In September, Seven & i rebuffed a $38.5 billion takeover offer from Canada's Alimentation Couche-Tard. It would have been the biggest foreign buyout in Japanese corporate history.

5. Oil gains

Oil prices edged slightly higher Friday, and were on course for their largest weekly gain in over a year on the increased risk of a growing conflict in the Middle East.

By 03:28 ET, the Brent contract gained 0.4% to $77.96 per barrel, while U.S. crude futures (WTI) traded 0.5% higher at $74.06 a barrel.

Brent crude futures were set to gain around 8% for the week - its steepest since February 2023, while U.S. crude futures' 8% weekly rise would be the largest since March last year.

(Reuters contributed reporting.)

By Shaloo Shrivastava

BENGALURU (Reuters) - Growth in India's dominant services sector remained robust but slackened to a 10-month low in September as demand slowed, a business survey showed on Friday.

The HSBC final India Services purchasing managers' index, compiled by S&P Global, fell to 57.7 in September from a five-month high of 60.9 in August and was below a preliminary estimate of 58.9.

"The headline business activity index fell below 60 for the first time in 2024, but we note that at 57.7, it was still much above the long-term average," noted Pranjul Bhandari, chief India economist at HSBC.

For more than three years, the index has stayed above the 50-mark separating expansion from contraction.

The new business sub-index - a gauge for overall demand - slipped to its lowest since November but was still above its historical average. International demand rose at its slowest pace this year.

Nevertheless, the business outlook for the year ahead improved, prompting firms to continue adding headcount. Hiring picked up slightly from August, extending the streak of job creation to more than two years.

Cost inflation accelerated from August as prices of electricity, food and other materials increased. However, firms passed on extra costs to clients at the slowest pace since February 2022.

"Services companies' margins have likely been squeezed further, as prices charged rose at a slower pace when input cost inflation intensified," added Bhandari.

Indian inflation was below the Reserve Bank of India's (RBI) 4% medium-term target in July and August. It was predicted to average 4.2%-4.6 in each quarter until at least July 2026, according to a recent Reuters poll.

By Jamie McGeever

ORLANDO, Florida (Reuters) -In today's digital and services-dominated economy, one might be forgiven for buying into the narrative that oil no longer has any real bearing on inflation. 

That would be a mistake. 

Inflation is starting to undershoot some central banks' targets, in large part because the year-on-year change in the oil price is deeply negative. This is sending a clear message: oil still matters – a lot.

There's barely any corner of the economy that oil doesn't reach. It heats homes and businesses, powers factories and every means of transport, and is a key input in the production of chemicals, plastics, materials and all manner of goods.

True, its direct and indirect contribution to price pressure has been diluted compared to the energy-intensive economy of decades gone by, but oil is still one of the most accurate inflation weather vanes around. 

And, despite recent geopolitical ructions, it's still clearly pointing in one direction.

HEAD FAKE

If investors get their oil price forecast wrong, chances are their view of inflation – and, by extension, central bank policy and the broader macro landscape - will also be blurred at best, and blinded at worst.

This is happening now. The past year featured many head fakes, misleading signals and wrong calls in financial markets, but perhaps the most consequential has been the collective miss on the direction of oil.

In a Reuters poll of economists and analysts conducted a year ago, the average 2024 price of Brent and West Texas Intermediate futures was forecast to be around $86 a barrel and $83/bbl, respectively. 

Brent rose above $90/bbl in April and WTI got close to that level, but oil prices have fallen sharply since then and last month dipped below $70/bbl. The year-on-year change in WTI has been negative every day since July 22 and approached -30% as recently as last week.

The effects of this on overall inflation are huge. Annual inflation in the euro zone is now 1.8%, below the European Central Bank's 2% target for the first time in more than three years. Consequently, ECB interest rate cut expectations have intensified considerably, even though central banks are theoretically supposed to ignore energy price fluctuations.

These dynamics are also easing price pressures in the United States, where energy inflation accounts for around 7% of the consumer price index and a much higher share of the producer price index.  

FED UNDERSHOOT?

Are current energy dynamics signaling that the Federal Reserve could cut rates more quickly than many expect? It's possible. 

Analysts at Goldman Sachs estimate that the energy price contribution to annual U.S. CPI will increase one-tenth of a percentage point to -0.35 percentage points by April next year, pushing headline CPI as low as 1.9%, below the Fed's 2% goal.

Using the current oil price futures curve as a guide, headline CPI inflation in April could slow to 1.8%.

Energy costs impact more than just headline inflation. Even if oil prices hold steady, core inflation will still be as much as 0.15 percentage points lower by the end of next year, and will drop a further 0.15 percentage points if oil falls another $20/bbl, Goldman's analysts reckon.

On the surface, the above figures may sound like small numbers, but in central banking every basis point matters. And these shifts can still move the needle on inflation and thus accelerate the Fed's easing cycle. 

Some measures of annualized monthly inflation rates are already at or below the Fed's 2% target, and Fed Governor Christopher Waller recently warned that core inflation could soon follow suit.

"Consumer energy prices are dragging down headline inflation. With oil prices down another 7% in September ... this drag should intensify in the September CPIs," JP Morgan economists wrote late last month.

Now, a geopolitical or economic shock could obviously disrupt this narrative. But, for now, it's reasonable to assume that weak oil price dynamics could send central banks back to their pre-pandemic playbooks sooner than anyone thought.

(The opinions expressed here are those of the author, a columnist for Reuters.)  

(By Jamie McGeever; Editing by Kirsten Donovan)

By Mark John

(Reuters) - Rising tensions in the Middle East add new uncertainties for the global economy even as policymakers start to congratulate themselves on having steered it out of a bout of high inflation without triggering recession.

Israel, which has been fighting with Hamas in Gaza for almost a year, has sent its troops into southern Lebanon after two weeks of intense airstrikes, escalating the conflict in the Middle East.

The following sketches what we know about how this could play out on the world economy in the weeks ahead.

WHAT IMPACT, IF ANY, HAS BEEN FELT SO FAR?

Very little beyond the immediate region, with the main effects limited to financial markets as investors hedge their portfolios with safe-haven assets. The U.S. dollar has been a beneficiary since Iran's ballistic missile attack on Israel: the dollar index, which measures the U.S. currency against the euro, yen and four other top currencies, is trading around three-week peaks.

Oil prices rose around 2% on Thursday on concerns a wider conflict could disrupt crude oil flows from the region - for example if Israel chose to target Iranian oil infrastructure which in turn could trigger retaliation from Iran.

But it is not clear that this will translate into the kind of sustained, sharper rises that motorists start to notice at the fuel pump. Analysts point out that the United States has high levels of crude oil inventories while OPEC producing nations have enough spare capacity to smooth out the impact of disruptions, at least in the short term.

HOW ARE ECONOMIC POLICYMAKERS REACTING?

As always, central bankers stress that their job is to look beyond unpredictable, one-off shocks to the economy and instead focus on the deeper, underlying trends. But they cannot afford to totally ignore geopolitical events either. 

Bank of England Governor Andrew Bailey told The Guardian newspaper that the bank could move more aggressively to cut interest rates if inflation pressures continue to weaken - suggesting central bankers for now did not see the Middle East conflict as a major threat to their attempts to temper inflation. Bailey said there seemed to be a commitment to keep oil markets stable but he also said the conflict could yet push up oil prices if things keep escalating.

Sweden's Riksbank Deputy Governor Per Jansson delivered a similar message, saying the effects of the Middle East conflict were not yet enough to warrant scratching economic forecasts.

The International Monetary Fund said on Thursday an escalation of the conflict in the Middle East could have significant economic ramifications for the region and the global economy, but commodity prices remain below the highs of the past year. It was too early to predict specific impacts on the global economy, IMF spokesperson Julie Kozack said.

WHEN WILL ANY IMPACT BECOME MORE EVIDENT?

For context, Brent crude futures are currently around $75 a barrel, well below their $84 level at the time of Hamas' Oct. 7 strike on Israel nearly a year ago and far off the $130 highs reached after Russia's invasion of Ukraine in February 2022.

Europe would be exposed to rising oil prices because, unlike the United States, it has no major domestic oil production. But even there, policymakers estimate a durable 10% rise in prices would be needed to push up inflation by just 0.1 percentage point. 

The economic impacts of an all-out war that led to wider attacks on energy infrastructure throughout the Middle East and Gulf regions plus further disruptions to trade routes through the Red Sea, would be more tangible.

Oxford Economics estimated such a scenario would spike oil prices up to $130 and knock 0.4 percentage points off global output growth next year, which the International Monetary Fund currently sees at around 3.3%.

(This story has been corrected to change the year to 2022, not 2023, in paragraph 14)

(Writing and reporting by Mark John in London; Additional reporting by David Lawder in Washington; Editing by Susan Fenton)

By Karen Brettell

NEW YORK (Reuters) -The dollar rose to a six-week high on Thursday as data showed a still-solid U.S. economy before Friday's closely watched jobs report, while safe haven demand on concerns about rising Middle East tensions and the impact of a dockworker strike also boosted the currency.

The greenback has additionally benefited from more dovish central bank expectations being built into currency peers, including the euro, sterling and yen.

Data on Thursday showed that U.S. services sector activity jumped to a 1-1/2-year high in September amid strong growth in new orders, though its measure of services employment fell, consistent with a slowdown in the labor market.

"Today is an example of how quickly the U.S dollar can recover," said Juan Perez, director of trading at Monex USA in Washington. While Thursday's data was "a little contractionary," the U.S. remains the envy of other countries, he said.

Other data on Thursday showed that the number of Americans filing new applications for unemployment benefits rose marginally last week, but Hurricane Helene's rampage in the U.S. Southeast and strikes at Boeing (NYSE:BA) and ports could distort the labor market picture in the near term.

The dollar index was last up 0.33% at 101.98 and reached 102.09, the highest since Aug. 19. It hit a 14-month low of 100.15 on Sept. 27.

"The dollar has been regaining some ground this week... some of it is just markets trying to navigate a lot of crosscurrents," said Vassili Serebriakov, FX & macro strategist at UBS in New York.

Improving economic data and more hawkish comments from Federal Reserve Chair Jerome Powell on Monday have reduced expectations that the Fed will cut rates by another 50 basis points at its Nov. 6-7 meeting.

Friday’s jobs report for September is the next major U.S. economic release that may sway Fed policy. Economists polled by Reuters expect 140,000 job additions, while the unemployment rate is anticipated to stay steady at 4.2%.

"U.S. data has been a bit firmer, which probably makes the market a little bit more cautious about selling the dollar ahead of the nonfarm payrolls report," Serebriakov said.

Traders are now pricing in a 35% probability of a 50 basis point cut next month, down from 49% a week ago, the CME Group's (NASDAQ:CME) FedWatch Tool shows.

The U.S. currency has benefited from a safety bid since Israel was attacked by Iran on Monday in a strike that raised fears the oil-producing Middle East could be engulfed in a wider conflict.

Oil prices rose on Thursday on concerns that crude oil flows from the region could be disrupted. Asked on Thursday if he would support Israel striking Iran's oil facilities, U.S. President Joe Biden told reporters: "We're discussing that."

Long lines of container ships also appeared outside major U.S. ports on Thursday as the biggest dockworker strike in nearly half a century entered its third day, preventing unloading and threatening shortages of everything from bananas to auto parts.

"The U.S. dollar is a safe haven in the midst of chaos," said Perez. "In the post-pandemic world the number one concern was, can we rebuild healthy supply chain logistics? And this headline news completely destroys that stability and health."

The euro has fallen on increasing expectations that the European Central Bank will cut rates at its Oct. 17 meeting as inflation recedes.

It fell 0.17% to $1.1026 and got as low as $1.1008, the lowest since Sept. 12.

Sterling tumbled after Bank of England Governor Andrew Bailey said that the British central bank could move more aggressively to cut interest rates if inflation pressures continue to weaken.

The British pound was last down 1.15% at $1.3114 and reached $1.3093, the lowest since Sept. 12.

The dollar also hit a six-week high against the yen as Bank of Japan board member Asahi Noguchi said the Japanese central bank must move cautiously and slowly to avoid hurting the economy.

It comes after Prime Minister Shigeru Ishiba said on Wednesday that Japan is not in an environment for an additional rate increase.

The dollar was last up 0.27% at 146.85 and earlier reached 147.25, the highest since Aug. 20.

In cryptocurrencies, bitcoin fell 0.36% to $60,687.91.

LONDON (Reuters) - Major brokerages, including Goldman Sachs and JPMorgan, now expect the European Central Bank to deliver a quarter-point cut at its Oct. 17 meeting, on the back of recent data showing economic weakness and slowing inflation.

Market pricing now reflects around a 90% chance of such a rate cut, which would follow reductions at the ECB's June and September meetings, as the data pushes policy makers to focus more on growth and less on price pressures.

Euro zone inflation dipped below 2% for the first time since mid-2021 in September, according to Tuesday data, while last week surveys showed euro zone business activity contracted sharply and unexpectedly in September, as the bloc's dominant services industry flatlined and a downturn in manufacturing accelerated.

Sources told Reuters that ECB policy doves are preparing to fight for an October rate cut - though this would likely meet resistance from more conservative peers - a turnaround from the aftermath of the ECB's September meeting when they saw an October move as unlikely.

Here are the latest forecasts from some brokerages.

Brokerage Oct '24 rate Dec '24 Terminal rate/end

cut estimate estimate '25 forecast

(bps) (bps)

Goldman 25 25 2.0% (June 2025)

Sachs

HSBC 25 25 2.25% (April 2025)

BNP Paribas (OTC:BNPQY) 25 25 2.25% (end-2025

forecast)

RBC 25 25 2.25% (April 2025)

JPMorgan 25 25 2.0% (June 2025)

Barclays 25 25 2.0% (June 2025)

25 25 2.5%

TD (March 2025)

Securities

25 25 Close

Jefferies to 2.0% (end 2025)

25 2.0%-2.5%

Deutsche 25 (mid-2025)

Bank

2.5%

Commerzbank (ETR:CBKG) 25 25 (June 2025)

1.5%

Bank of 25 25 (end-2025)

America

1.75%

Nomura 25 25 (Sept 2025)

2.0%

SEB 25 25 (June 2025)

1.5%

Citi 25 25 (Sept 2025

UBS IB - 25 2.25% (end-2025

forecast)

ING - 25 2.25% (end 2025

forecast)

BBVA (BME:BBVA) - 25 2.75% (November

2025)