By Sara Sjolin, MarketWatch , Ryan Vlastelica and Hiroyuki Kachi

U.S. jobs report is the key event for Friday

The dollar on Friday clawed back some of its recent losses, rising against its major rivals, although trading could shift following the closely watched U.S. jobs report.

The ICE Dollar Index added 0.2% to 101.70, but it remains down by 0.5% for the week. On Thursday, the index slumped 1.1% ( in its biggest one-day drop since July 2016. The drop came as market participants seem to have off-loaded their bets on a higher greenback after dovish minutes from the Federal Reserve (

Despite that recent weakness, the greenback has otherwise been strong recently, seeing particular gains since the November election in the U.S., with investors betting that President-elect Donald Trump will push for policies that both accelerate economic growth and stoke inflation. Over the past three months, the index is up 5.2%, and it has been trading near levels last seen in 2002.

Against the yen, the greenback was trading at Yen116.13, compared with Yen115.34 late Thursday in New York.

The euro weakened to $1.0573 from $1.0608 late Thursday while the pound fell to $1.2388 from $1.2419 late Thursday in New York.

"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 the current expectations that the Federal Reserve will implement three interest rate increases in 2017.

The ADP report out on Thursday ( showed 153,000 private-sector jobs were added last month, missing analyst forecasts. However, a read on weekly jobless claims, also released on Thursday, showed claims dropping to a multidecade low.

On Friday, China guided the yuan ( 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 6.9182 to the dollar in Asian trade on Friday. On Wednesday and Thursday in the offshore market, the yuan surged 2.5% against the dollar.

(END) Dow Jones Newswires

January 06, 2017 08:19 ET (13:19 GMT)

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