- Dollar heads for weekly loss
- Currencies on guard ahead of Friday's U.S. jobs data
- ECB's hawkish tone keeps euro supported
SINGAPORE, June 6 (Reuters) - The dollar was headed for a weekly loss on Friday, undermined by signs of fragility in the U.S. economy and as trade negotiations between Washington and its trading partners made little progress despite a looming deadline.
Key for markets will be the U.S. nonfarm payrolls report later on Friday, which will draw greater scrutiny after a slew of weaker-than-expected economic data this week underscored the headwinds from President Donald Trump's tariffs.
Currencies were mostly rangebound in the Asian session as traders stayed cautious ahead of the data release.
The euro last bought $1.1436, having risen to a 1-1/2-month top in the previous session following hawkish remarks from the European Central Bank (ECB) at the conclusion of its policy meeting.
"We are inclined to treat Lagarde's hawkishness...with a degree of caution, albeit given this shift in tone, we no longer see our previous forecast for a 1.50% terminal rate as the most likely outcome," said Nick Rees, head of macro research at Monex Europe.
He now expects just one more rate cut in September which will take the deposit rate to 1.75%.
Sterling was little changed at $1.3576 having scaled a more than three-year peak in the previous session, and was set to rise about 0.9% for the week.
The yen fell 0.27% to 143.93 per dollar.
Most currencies had surged against the dollar late on Thursday, helped by news that Trump and Chinese President Xi Jinping spoke in a more than one-hour-long call, before paring some of their gains.
Against a basket of currencies, the dollar edged slightly higher to 98.85 in Asia, and was headed for a weekly loss of 0.6%.
Analysts said Friday's jobs data would likely determine the next move in currencies.
Expectations are for nonfarm payrolls to have increased by 130,000 jobs last month, while the unemployment rate is forecast to hold steady at 4.2%, with greater risks of a rise to 4.3%.
"Within all the noise...the softness that we've seen in the data this week has probably been more responsible for rejuvenating the bearish U.S. dollar narrative than anything else that's gone on," said Ray Attrill, head of FX research at National Australia Bank.
"We've always taken the view that once it becomes clear that the U.S. economy is no longer exceptional, and that the policy actions that we've seen to date, together with the relative tightness of Fed policy, will start to show through particularly in a weakening labour market. Hence the importance of tonight's numbers."
Adding to headwinds for the dollar, investors remain worried about U.S. trade negotiations and the lack of progress in hashing out deals ahead of an early July deadline.
The highly anticipated call between Trump and Xi also provided little clarity and the spotlight on it was quickly stolen by a public fallout between Trump and Elon Musk.
Elsewhere, the Australian dollar fell 0.16% to $0.6497, and was set for a 1.1% weekly rise.
The New Zealand dollar edged 0.03% higher to $0.6040 and was also headed for a 1.1% weekly gain.
In cryptocurrencies, bitcoin jumped 2.4% to $102,905, rebounding from Thursday's one-month low. Ether similarly rose 2.3% to $2,453.54.
"Despite escalating U.S.-China tensions, including expanded tech sanctions and higher steel tariffs, bitcoin has remained resilient," said Gracie Lin, OKX's Singapore CEO.
"As macro factors like U.S. jobs data and tariff tensions dominate June, the focus remains on how institutional confidence and consolidation will shape the next phase of market development."
Reporting by Rae Wee; Editing by Sam Holmes and Jacqueline Wong
Source: Reuters