Dollar struggles ahead of US jobs report

The dollar struggled Friday as markets focus on US jobs data later in the day, after the Federal Reserve chief threw cold water on hopes for an imminent rate hike.

The payrolls report will give a key clue about the state of the world’s top economy, with a strong reading likely to reignite hopes that the Fed will lift borrowing costs this year, after a December hike.

The greenback has fallen against all its 16 major peers this week as central bank boss Janet Yellen suggested the global slowdown would delay any more rate moves.

“Payrolls will provide the key directional cue for markets, even if it may no longer have direct near-term implications for the Fed,” Sue Trinh, head of Asian foreign-exchange strategy at Royal Bank of Canada, told Bloomberg News.

In Tokyo, the dollar bought 112.17 yen, down from 112.60 yen in New York Thursday, while the euro fetched $1.1383 and 127.69 yen, compared with $1.1377 and 128.11 yen in US trade.

The dollar made gains against some emerging currencies, including the Thai baht, Philippine peso, Taiwan dollar and South Korean won.

The yen has won support from falling equity markets and as jitters over China’s economy push traders into a currency seen as a safe bet in times of turmoil.

On Friday, the Bank of Japan’s closely watched Tankan survey showed that confidence among Japan’s biggest manufacturers dropped last quarter to its lowest level since Prime Minister Shinzo Abe kicked off his much-vaunted programme to boost growth three years ago.

The poor reading will heap pressure on Japanese policymakers to unveil more stimulus measures, as evidence of a slowdown in the world’s number three economy piles up.

Meanwhile, currency markets largely shrugged off better-than-expected Chinese manufacturing figures for March, which showed the first expansion of activity since June.

Economists, however, said that the upbeat data could be a sign that Beijing’s efforts to stimulate the powerhouse economy is taking hold.

“We expect to see further improvements in China’s economic data in the months ahead,” said research house Capital Economics.