By Jessica Mead
The dollar was firmer against the euro and the pound during European hours Friday but was mixed against other major currencies ahead of highly-anticipated U.S. jobs data while the Norwegian krone lost ground after disappointing manufacturing data.
Both the common currency and the pound had been hit Thursday after their respective central banks engaged in forward guidance to insist that monetary policy would remain very accommodative, in contrast with the U.S. Federal Reserve's efforts to signal that it would start to wind down its bond-buying program.
They extended their losses Friday with the euro falling to its lowest level against the greenback since late May at $1.2869 and the pound at its weakest since the middle of March at $1.4965.
"We view the price action as fully justified and believe the near-term risks to these two currencies are now to the downside," said Chris Walker, currency strategist at Barclays PLC. BARC.LN +0.80%
But the greenback's performance against other developed market currencies was less clear-cut, with it a touch stronger against the New Zealand and Canadian dollars but showing some weakness against the Australian dollar.
"The commodity currencies have shown good resilience thanks to dollar bulls switching their focus to the euro and sterling. Forward guidance from the ECB and BoE has perhaps reminded investors that there's still some yield on offer in the likes of Australia and New Zealand," said Citigroup C -1.01% .
Further direction for the dollar is expected at 1230 GMT, when U.S. nonfarm payrolls June data are published. The consensus of analysts polled by Dow Jones Newswires is for a gain of 160,000 and for the unemployment rate to edge lower to 7.5% from 7.6% in May.
"Should employment really have risen more notably than expected--and we should not disregard the development of the unemployment rate here either--[the euro against the dollar] is likely to get the next hit. The starting point for the two central banks could hardly differ any further. It certainly seems very dangerous to be banking on higher [euro-dollar] prices at the moment," said Lutz Karpowitz, chief currency strategist at Commerzbank CBK.XE +0.92% in Frankfurt.
Elsewhere, the Norwegian krone was sharply lower after weak May manufacturing data, which showed a drop of 2.1% on the month. That propelled the euro higher against the krone, with it trading above 7.94 krone by around 1000 GMT.
At 1028 GMT, the euro was trading at $1.2880 against the dollar, compared with $1.2914 late Thursday in New York, according to trading system EBS. The dollar was at ¥99.98 against the yen, compared with ¥99.90, while the euro was at ¥128.78 compared with ¥129.26. Meanwhile, the pound was trading at $1.4972 against the dollar, compared with $1.5078 late Thursday in New York.
The Wall Street Journal Dollar Index, which tracks the dollar against a basket of currencies, was trading at 75.710, compared with 75.554 late Thursday in New York.
