FOREX-Dollar under pressure; yen and Aussie resurgent

By Rae Wee and Alun John

SINGAPORE/LONDON, Feb 11 (Reuters) - The dollar struggled across the board on Wednesday, particularly against the Japanese yen and Australian dollar, with traders fearing a soft number from always important U.S. payrolls data.

Nonfarm payrolls likely increased by 70,000 last month after rising 50,000 in December, a Reuters survey of economists showed, and a large beat or miss, when the data is released at 8:30 a.m. (1330 GMT) will shape expectations for Federal Reserve policy.

Traders are speculating that the number could be on the low side after White House economic adviser Kevin Hassett said on Monday that Americans could see smaller job growth numbers in the coming months due to lower population figures and higher productivity.

"The market is fearful of getting another soft payrolls report today after the comments from Hassett, telling people not to panic," said Lee Hardman, senior currency analyst at MUFG.

Markets are currently fully pricing a 25 basis point Fed rate cut by June, and see around a 50% chance of one as soon as April.

Those bets rose on Tuesday after the U.S. posted slower-than-expected retail sales in December, while a separate report showed growth in U.S. labour costs unexpectedly slowed in the fourth quarter.

The euro was up 0.1% at 1.1904 EUR=, sterling gained 0.34% to $1.3686 GBP= but the biggest major mover was the yen, against which the dollar was 0.5% lower at 153.63, as the Japanese currency continues to outperform after Prime Minister Sanae Takaichi's landslide election victory. JPY=

The dollar has lost 2.3% on the yen since Takaichi's weekend win, while the euro has shed 1.6% on the yen. EURJPY=

Many analysts had been expecting the yen to weaken if Takaichi, who is in favour of tax cuts despite Japan's large debt burden, won big, but the moves have confounded those bets, and have now become somewhat self-reinforcing.

"The yen’s failure to weaken further even after Prime Minister Takaichi strengthened her grip on power in Japan has likely encouraged speculators to further scale back short yen positions in the near term," said Hardman.

"People have been selling the yen since September, and now they seem to think enough of a risk premium is priced in."

HAWKS ARE BACK

The other notable movers were linked to central banks likely turning more hawkish.

The Australian dollar AUD= broke above $0.71 for the first time since February 2023, and last traded 0.5% higher at $0.7110, after Reserve Bank of Australia Deputy Governor Andrew Hauser said inflation was too high and policymakers were committed to doing whatever was necessary to bring it to heel.

"We have upgraded our Aussie dollar view... the end-year forecast is $0.73 from $0.69," said Moh Siong Sim, a currency strategist at OCBC.

He noted the RBA's rate hike last week to 3.85% was the first in the G10 outside of Japan and "that hawkish hike will put additional focus on whether the RBA would follow with more hikes down the road."

Markets imply around a 70% chance rates will rise to 4.10% at the RBA's May meeting, following the release of first-quarter inflation figures. 0#AUDIRPR

Norway's crown also outperformed a day after stronger-than-expected core inflation data caused markets to price out any further monetary easing there.

The dollar was last down 0.77% at 9.452 crowns NOK=, its lowest since 2022, with the euro 0.55% lower at 11.26 crowns, its lowest since June 2024. EURNOK=