Dollar lower against yen, euro ahead of U.S. jobs data

Tokyo (Jan 9)  The dollar was lower against the yen and the euro in Asian trade Friday, with investors taking a wait-and-see stance ahead of closely-watched U.S. jobs data scheduled later in the day.

The dollar USDJPY, -0.39%  was at ¥119.37 compared with ¥119.65 late Thursday in New York. The euro EURUSD, +0.20%  was at $1.1807 from $1.1788.

The greenback firmed earlier in the session with the Nikkei Stock Average NIK, +0.18%  kicking off trading with a strong tone. But the stock market’s slowdown later in the morning prompted profit taking.

There seemed have been the dollar selling by Japanese exporters related to their commercial transactions ahead of three-day weekend in Japan. But investors mainly remained reluctant to take major moves, given a lack of fresh cues.

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Anticipating a fall-back in December U.S. nonfarm payrolls from an extremely strong reading in November, there has been the dollar selling to lock in profits, said Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow. See jobs data preview

“After adjusting to as low as ¥118.05 (set on Tuesday), the USD/JPY is coming back to a good level. So there are investors willing to sell,” said Sakai.

The dollar is very likely to cross the ¥120-threshold, assuming strong jobs report readings, said Sakai. But he added that it’s premature to try upside toward ¥121 and ¥122, given such risk events as the European Central Bank policy meeting Jan. 22, Greek election on Jan. 25, as well as uncertainties over oil prices.

“It won’t be easy for the dollar to go up” ahead of the jobs data, said Shusuke Yamada, chief Japan FX strategist at Merrill Lynch. But as the underlying situation surrounding the dollar-yen trading pair isn’t bad, the greenback may respond positively to upbeat jobs data.

But hurdles appear to be set high this time, as only a slightly stronger reading would not be sufficient enough to bring the dollar to go straight up given uncertainties in the euro zone, said Yamada. For instance, the dollar may be able to test ¥120, assuming an increase in non-farm payrolls by 250,000 as Merrill has estimated, together with favorable wage growth. The increase in non-farm payrolls are slightly better than the market consensus of 240,000.

Among other currency pairs, the euro EURJPY, -0.18%  was at ¥140.95 from ¥141.03.

The WSJ Dollar Index BUXX, -0.16% a measure of the dollar against a basket of major currencies, was up 0.14% at 84.02.

Source: MarketWatch