Wall St dips as taper delay talk builds

The US dollar strengthened against the yen on speculation delayed September jobs data due on Tuesday (US time) will be strong enough to allow the Federal Reserve to contemplate tapering by year-end.

Economists forecast that 180,000 jobs were created in September, according to a Reuters survey, from 169,000 a month earlier, while the unemployment rate remained at 7.3 per cent.

The greenback strengthened to 98.13 yen from 97.77 yen in late New York trading on Friday. The Dollar Index was little changed at 79.669, having touched an eight-month low of 79.478 on Friday in the US.

"For now all eyes will turn to US nonfarm payrolls data tomorrow with markets anticipating a print near the 180K level," Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, told Reuters. "If the numbers are close to expectations the greenback could see a relief rebound as the week proceeds."

US Treasuries fell for the first time in four sessions ahead of the jobs report, which has originally scheduled for release on October 4. The yield on the benchmark 10-year bond rose three basis points to 2.61 per cent. The Dow Jones Industrial Average slipped 20.33 points to 15,3798.97 and the Standard & Poor's 500 Index fell 3.38 points to 1741.12.

Debate over the timing of any Fed tapering of its US$85 billion a month of bond buying programme has been sharpened by the federal shutdown that ended last month, which may yet have contributed to a slight cooling of the world's biggest economy.

Chicago Federal Reserve President Charles Evans told CNBC that it would be tough for the central bank to make a call this year because it needs to see more evidence the economy is on a recovery track.

"I think we need a couple of good labour reports and evidence of increasing growth, GDP growth," he said. "It is probably going to take a few months to sort that one out."

Lawmakers in Washington kicked the budget and debt ceiling debate back out to early 2014, buying some time to reach accord but there are signs in debt markets that Democrats and Republicans will struggle to find common ground.

At the US Treasury's auction of US$35 billion of three-month bills, which mature just as Washington has to focus again on the budget, investors bid for 4.03 times the amount on offer. That's below the average bid-to-cover ratio of 4.64 at the 40 bill sales this year before the Oct. 1 shutdown, Bloomberg reported, citing Treasury data.

"Even as people feel more confident about the front end, we are still fielding questions from clients regarding what maturities they should stay away from for the next debt ceiling issue," Kenneth Silliman, head of US short-term rates trading at Toronto-Dominion Bank's TD Securities unit in New York, told Bloomberg. "Having just avoided this bullet, they want to pre-emptively avoid the next one."

Crude oil fell as US stockpiles rose in the week ended Oct.11, after the data was delayed by the government shutdown. Stockpiles had fallen for 14 straight weeks, according to Bloomberg.

US oil futures were down as much as US$1.73 to US$99.08 a barrel in late US trading. Brent crude futures for December delivery fell 38 US cents to US$109.56 a barrel.

Meantime, shares of McDonald's fell 0.9 per cent to US$94.31 after the world's largest restaurant chain reported third quarter sales that missed estimates and warned that global sales from existing restaurants had been flat this month and likely to remain so through the fourth quarter because of tepid global economic growth and increased rivalry.

Sales rose 2.4 per cent to US$7.32 billion in the most recent three months, just missing analyst estimates of US$7.33 billion.

The shares have gained 6.7 per cent in the past 12 months, lagging behind the S&P 500's 21 per cent advance.