Dollar edges up as BOJ's Kuroda endorses benefits of weak yen
Credit: Reuters/Shohei Miyano
A U.S. one-hundred dollar bill (C) and Japanese 10,000 yen notes are spread in Tokyo, in this February 28, 2013 picture illustration.
The dollar had fallen from six-year highs as a slide in global equities had driven U.S. Treasury yields lower and increased demand for the safe-haven yen.
Earlier in the week the U.S. currency had rallied to its six-year high versus the yen and a two-year peak against the euro on well-set views of monetary policies in the United States and those of the euro zone and Japan diverging.
The dollar rose 0.4 percent to 108.83 yen, coming off the week's trough of 108.01 hit overnight on bargain-hunting bids, but was still some distance from the six-year peak of 110.09 touched on Wednesday.
An initial bounce in Tokyo stocks also helped the dollar early in the session by easing demand for the safe-haven Japanese currency.
'The fact that dollar/yen managed to hold just above 108 encouraged dollar bulls. Whether the dollar is really on an uptrend is still unclear, so buying on dips is a sound strategy for now,' said Bart Wakabayashi, head of forex at State Street in Tokyo.
Profit-taking on the dollar is likely to keep dollar capped at 109 yen ahead of the nonfarm payrolls, he said.
The dollar was poised to lose 0.4 percent against the yen this week.
The euro was little changed at $1.2658 after putting some distance overnight from its two-year low of $1.2571. The common currency was on track to shed 0.25 percent against the dollar this week.
The euro gained on Thursday after European Central Bank President Mario Draghi sounded less dovish than some anticipated, giving no indication of imminent stimulus after the central bank's policy meeting.
'What we saw is adjustment of long positions in the dollar. If the non-farm payrolls tonight is a little stronger than forecast, it will prompt buy-backs for the dollar,' said Junichi Ishikawa, a market strategist at IG Securities in Tokyo.
'The euro's rebound did not look convincing even as Draghi did not sound as dovish as expected. The fundamentals remain unchanged - the ECB is seen being forced to adopt QE (quantitative easing) down the road, while the Fed appears poised to hike rates if conditions allow.'
After a week of mixed data out of the United States, the September nonfarm payrolls data due at 2130 GMT could further fuel expectations of an early rate hike by the Fed.
According to a Reuters poll of economists, nonfarm payrolls are seen coming in at 215,000, a big jump from August.
The Australian and New Zealand dollars also held on to gains won back from the greenback after the U.S. currency's rally against the euro and yen was halted.
The Aussie fetched $0.8785 after bouncing from a nine-month low of $0.8663 reached earlier in the week. The antipodean currency was on track rise 0.2 percent this week for a rare weekly rise.
The kiwi traded at $0.7866 after touching a 14-month trough of $0.7708 this week.
(Editing by Eric Meijer)
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