1439 ET – The dollar is losing strength, along with Treasury yields, as concerns about the U.S. job market overshadow the fiscal health anxieties that led to yesterday’s bond selloff and the dollar's increase. The BLS indicates a drop in job openings in July compared to June, which fuels predictions of more disappointing employment figures in August, set to be released on Friday. A weakening job market suggests a need for an interest rate cut, which negatively impacts the currency. The WSJ Dollar Index decreases by 0.2%, a drop intensified by this morning’s job openings report. The greenback declines by 0.3% against both the yen and the pound, and by 0.2% against the euro. (paulo.trevisani@wsj.com; @ptrevisani)

Investors Reduce Short Positions on Dollar Following Global Bond Selloff
1228 GMT – Investors have reduced their short positions against the dollar after a global bond selloff, according to ING’s Francesco Pesole in a note. Rising debt concerns outside the U.S. may have prompted this reduction in dollar short positions, he notes. “However, we are skeptical that this will offer lasting support to the dollar ahead of significant data releases and the expected easing of Federal Reserve [policy],” he adds. Labor market data is becoming increasingly important after Fed Chair Jerome Powell indicated that employment risks have surpassed inflation worries, he states. The job openings and labor turnover survey is scheduled for release at 1400 GMT, while the crucial nonfarm payrolls report will be published on Friday. The DXY dollar index drops 0.2% to 98.236, having previously reached a one-week high of 98.635. (renae.dyer@wsj.com)

Sterling Implied Volatility Increases Following Gilt Selloff
1132 GMT – Sterling implied volatility, an important indicator of anticipated price fluctuations in the options market, surges after a significant increase in long-term U.K. government bond yields. According to LSEG data, the three-month implied volatility for sterling against the dollar reaches a two-month peak of 7.96%. Investor anxiety is being driven by the government's fiscal deficit, as noted by Convera's George Vessey. He states, “[U.K. Treasury chief] Rachel Reeves is confronted with a challenging balancing act: identifying savings amidst internal party conflicts while likely needing to increase taxes again in the autumn budget.” Reeves announced on Wednesday that the budget will be presented on November 26. Following this, sterling rises by 0.1% to $1.3398 after previously hitting a four-week low of $1.3330, as per LSEG data. (renae.dyer@wsj.com)

Sterling Declines as Long-End Gilt Yields Surge
0832 GMT – Sterling drops to a four-week low against the dollar as yields on long-dated U.K. government bonds sharply increase. The 30-year gilt yield reaches its highest level since 1998 at 5.752%, according to LSEG data. This shift is driven by high inflation and a reduction in expectations for interest rate cuts by the Bank of England, as noted by ING's Francesco Pesole. While demand for ultra-long dated debt remains weak across developed markets, a recent 10-year gilt auction saw strong interest. Pesole suggests that sterling is unlikely to decline much further solely due to gilt movements. Sterling falls to a low of $1.3330, as reported by LSEG data. Meanwhile, the euro increases by 0.1% to 0.8702 pounds. (renae.dyer@wsj.com)

Japanese Yen Declines as Ultra-Long Yields Surge
0903 GMT – The Japanese yen has dropped to a one-month low against the dollar, coinciding with a record high in the yields of the country’s 30-year government bonds. This comes amid fresh speculation regarding Prime Minister Shigeru Ishiba's potential resignation. Ishiba has been under pressure to step down following his party's loss of majority in the upper house elections held in July. MUFG Bank’s Derek Halpenny notes, “Uncertainty will help fuel selling given the increased risks of a larger fiscal spending package if a new leader is elected who supports that.” He also mentions that this situation could raise doubts about a possible interest rate hike by the Bank of Japan in October. The dollar has climbed to a peak of 149.13 yen, while the yield on the 30-year JGB reached 3.292%, according to LSEG data. (renae.dyer@wsj.com)

Dollar Softens Ahead of U.S. Labor Market Data
0702 GMT – The dollar has retreated after significant gains on Tuesday as investors look forward to crucial U.S. labor market data. The job openings and turnover survey scheduled for 1400 GMT will be closely watched in anticipation of the much-awaited nonfarm payrolls report due on Friday. The Federal Reserve is largely expected to initiate interest-rate cuts with a 25 basis-point reduction at its meeting on September 17, as indicated by LSEG data. However, if the jobs data turns out worse than expected, suggesting a considerable economic slowdown, markets might brace for more aggressive rate cuts. Fed governor Christopher Waller has indicated he could support a larger cut in September if the jobs data reflects “substantial weakening.” The DXY dollar index has decreased by 0.1% to 98.343. (renae.dyer@wsj.com)