By Sara Sjolin, MarketWatch , Hiroyuki Kachi
U.S. jobs report is the key event for Friday
The dollar clawed back some of its recent losses on Friday, rising against other major currencies ahead of the closely watched U.S. jobs report.
The ICE Dollar Index added 0.1% to 101.63, after slumping 1.1% on Thursday (http://www.marketwatch.com/story/dollar-slides-again-on-feds-considerable-uncertainty-about-trump-future-2017-01-05), in its biggest one-day drop since July 2016.
Against the yen, the greenback was trading at Yen115.97, compared with Yen115.34 late Thursday in New York. The euro weakened to $1.0601 from $1.0608 late Thursday.
"Traditionally in front of nonfarm payrolls, markets will begin to consolidate, so the early dollar gains today could be an element of that," said Richard Perry, market analyst at Hantec Markets, in a note.
However, "the ADP employment change came with a slightly negative surprise and it will be interesting to see if this is a sign of a weaker payrolls report, which would see the dollar coming under further pressure," he added.
The top tier U.S. nonfarm payrolls report comes out at 8:30 a.m. Eastern Time, and economists polled by MarketWatch forecast 180,000 jobs were added to the economy in December. A disappointing number for December could dial back expectations for three interest rate increases in 2017.
The ADP report out on Thursday (http://www.marketwatch.com/story/private-sector-adds-153000-jobs-in-december-adp-2017-01-05) showed 153,000 private-sector jobs were added last month, missing analyst forecasts.
The dollar is recovering after Thursday's rout (http://www.marketwatch.com/story/dollar-slides-again-on-feds-considerable-uncertainty-about-trump-future-2017-01-05), in which investors seemed to have off-loaded their bets on a higher greenback after dovish minutes from the Federal Reserve (http://www.marketwatch.com/story/interest-rate-hikes-might-come-at-faster-pace---fed-minutes-show-2017-01-04). That marked a partial reversal of the currency's rise since Donald Trump's victory in the U.S. presidential election in early November.
Over the longer term, another risk factor is whether President-elect Donald Trump will intensify his protectionist stance, following his remarks opposing Toyota Motors's (7203.TO) proposed plant construction in Mexico and threats to impose a tariff on imported Corolla cars.
"That's negative for the U.S. economy," disrupting efficient corporate management and international supply networking, said IG Securities market analyst Junichi Ishikawa.
On Friday, China guided the yuan (http://www.marketwatch.com/story/yuan-rises-by-the-most-since-2005-in-daily-fixing-2017-01-06) 0.9% stronger against the U.S. dollar Friday, its biggest increase since 2005. At the same time, the overnight yuan borrowing cost jumped above 60%, the latest signs that Chinese authorities are fighting to control the yuan's descent.
The yuan fell 0.4% from Thursday's close to 6.9082 to the dollar in Asian trade on Friday. In offshore markets, the yuan fell 0.6%, with one dollar buying 6.8261 yuan. On Wednesday and Thursday in the offshore market, the yuan surged 2.5% against the dollar.
The pound fell to $1.2388 from $1.2419 late Thursday in New York.
(END) Dow Jones Newswires
January 06, 2017 04:49 ET (09:49 GMT)
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