By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The U.S. dollar was slightly lower versus most major rivals Friday, but activity was subdued as currency traders moved to the sidelines ahead of the release of June U.S. non-farm payrolls and other employment data.
"A weak number will work against the U.S. dollar," wrote economists at BNP Paribas.
Economists surveyed by MarketWatch expect total jobless claims to fall 130,000 in June. The focus, however, will be the number of private-sector jobs created, which is expected to come in at 115,000. The government has already said it let go of 250,000 temporary Census workers last month. Read about the jobs report.
The data will be released at 8:30 a.m. Eastern.
The dollar took a drubbing Thursday, undercut in part by a rise in weekly U.S. initial jobless claims, a fall in home sales and a weak reading on a gauge of manufacturing activity.
That reaction stood in contrast to the pattern that's held to varying degrees to the recent pattern, in which the dollar has tended to benefit from safe-haven flows amid negative economic news.
"The greenback had not been affected by bad macro data over the past few weeks, but this is likely to have been due to the fact that investors initially considered these as one-offs," wrote Ulrich Leuchtmann, currency analyst at Commerzbank in Frankfurt. "The concentration of weak data might have caused investors to rethink."
The dollar index (DXY 84.41, -0.31, -0.37%) , a measure of the greenback against a trade-weighted basket of six major currencies, was down slightly at 84.537 from 84.680 in late North American trading on Thursday.
Meanwhile, the euro (CUR_EURUSD 1.2548, +0.0032, +0.2557%) , which jumped sharply versus all its major rivals on Thursday, changed hands at $1.2513 versus the dollar, up slightly from $1.2486 late Thursday.
But some strategists questioned the euro's ability to follow through on gains despite rising concerns about the strength of the U.S. economic recovery.
"Let's not forget that the euro-zone growth environment is not more appealing than that of the U.S.," wrote strategists at Brown Brothers Harriman. "In fact, it is still the opposite."
They contend a diverging economic climate between Germany and peripheral euro zone countries will continue to undercut the euro, with numerous austerity measures likely to make things worse.
"Bottom line is that despite the recent disappointment from the U.S. economy, we remain of the view that the U.S. output gap will close faster than that of the euro zone and that the U.S. economy is in a better place than that of the euro zone at this point of the cycle," they wrote.
The euro posted little reaction to data showing euro-zone unemployment was unchanged in May at 10%, matching a 12-year peak for the third consecutive month. Read about euro-zone unemployment.
The British pound (CUR_GBPUSD 1.5197, +0.0032, +0.2110%) rose 0.3% versus the dollar to change hands at $1.5195.
The Australian dollar initially rose Friday after the Australian government announced a deal with the mining industry on a controversial resource-tax plan.
The country's new prime minister, Julia Gillard, announced the deal in Canberra before the stock-market open, saying a "basic structure" for taxing natural-resource profits was now in place. See full story on Australian resource tax.
The Aussie (CUR_AUDUSD 0.8439, -0.0020, -0.2364%) later gave up gains, however, to buy 84.47 U.S. cents, down 0.1%, after rising as high as 85.095 earlier.
Meanwhile, China's yuan rose against the U.S. dollar to another record high, after the People's Bank of China set its daily parity rate sharply higher. The unit is allowed to trade within a bank of 0.5% on either side of the official rate.
China set the rate at 6.7720, the highest level since it revalued the yuan and abandoned its dollar peg in 2005.
The yuan climbed as high as 6.7696 to the dollar in over-the-counter dealings, according to Dow Jones Newswires.
Against the yen, the dollar (CUR_USDYEN 87.5000, -0.2200, -0.2508%) bought ¥87.61, up from ¥87.42.
