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Asian Session – Dollar subdued ahead of NFP; Gold at 1-year high

The US dollar hovered near yesterday’s lows when it fell following data from the ISM non-manufacturing composite showing that employment in the services sector fell in February. The greenback extended its slide in early Asian trading to drop to 113.23 yen but rebounded to 113.93 yen in late session.

The yen was broadly weaker against other currencies on Friday as steady oil prices provided some risk appetite, taking the shine off the yen’s safe haven appeal. There was also little reaction to strong Japanese wage data and comments from the Bank of Japan’s Governor who played down expectations of further cuts in interest rates into negative territory.

The euro climbed to a one-week high of 124.70 yen, while sterling was up at 161.33 yen in late Asian trading.

The Australian dollar extended its gains against the US dollar on Friday despite slightly weaker-than-expected retail sales data in Australia for January. Investors have pared back their expectations of further rate cuts by the RBA following a recent run of strong data. The aussie reached a 3-month high of 0.7376 today before easing back slightly in late Asian trading.

The Canadian dollar was also stronger but below yesterday’s highs on improving outlook for crude oil prices. A cut in US oil output for the sixth week running reinforced the view that oil prices may have bottomed out. US oil futures were last trading 0.5% firmer at $34.74 a barrel, while Brent crude managed to hold above $37 a barrel on Friday.

The US dollar hit a 3-month low of 1.3370 versus the loonie on Thursday but was back above the 1.34 level today.

The greenback’s sell-off on Thursday attracted interest in gold, which surged by over 2% yesterday, hitting a 1-year high of $1268.18 per ounce. It had eased to around $1260 on Friday.

The dollar was further weighed down by dovish comments yesterday from Dallas Fed President Robert Kaplan who suggested that the Fed needs to show patience in its decision for when to next raise interest rates.

Both the euro and the pound took advantage of the dollar weakness ahead of the February jobs report later on Friday to climb to 1.0952 and 1.4155 dollars respectively.

Looking ahead to the rest of the day, the only major data to watch is the all-important non-farm payrolls report for February where a gain of 195k jobs is expected.

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