The U.S. dollar regained some ground versus the euro and notched a five-month high versus the Japanese yen as traders braced for another round of historically ugly U.S. labor market data.
The dollar has tended to gain ground due to repatriation flows, deleveraging and haven-related buying during periods of rising economic uncertainty and financial turmoil.
Economists surveyed by MarketWatch expect nonfarm payrolls to fall by 688,000 in March, for the biggest monthly decline since October 1949. The unemployment rate is expected to climb to 8.5% from 8.1% in February. See full story.
The Labor Department is scheduled to release the March employment report at 8:30 a.m. Eastern.
The dollar index , which measures the greenback against a trade-weighted basket of six major currencies, traded at 84.474, up slightly from 84.319 in North American trade late Thursday.
The dollar rose versus the Japanese currency to trade above 100 yen for the first time since Nov. 4. The dollar traded as high as 100.15 yen and recently changed hands at 99.82 yen, up slightly from 99.55 yen late Thursday.
The euro fell slightly versus the greenback to trade at $1.3443, down from $1.3461.
A big drop in payrolls could put some initial pressure on the dollar, allowing the euro to spike back toward $1.35 or even test the $1.37 level, said Roberto Mialich, a foreign-exchange strategist at UniCredit MIB in Milan.
But dollar weakness could prove short-lived if equity markets weaken in reaction to the labor report, he said.
Strategists said the dollar was likely buoyed Friday by short-covering after slumping hard versus major rivals Wednesday. Haven-related support for the currency was reversed as equity markets soared on a change in accounting rules and a commitment by the Group of 20 nations to boost funding for the International Monetary Fund and other international financial institutions. See full story.
The IMF decision was particularly favorable for previously beleaguered emerging-market currencies that had been plagued by worries about high foreign-denominated government and consumer debt.
The euro was also boosted by the European Central Bank's decision to cut its key lending rate by just a quarter point to 1.25%. Investors and economists had largely expected a half-point reduction. See full story.
The British pound traded at $1.4745, up from $1.4724.
Activity in Britain's services sector continued to contract sharply in March, but slowed the pace of the decline from February, according to the CIPS/Markit purchasing managers index released Friday.
The business activity index rose to 45.5 in March, up from 43.2 in February. A reading of less than 50 signals a decline in activity, while a figure of more than 50 signals expansion.
The index is still in line with a significant reduction in activity and marked the eleventh-consecutive monthly decline, the longest such stretch in survey history, CIPS said
