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    Asian Session – Dollar muted ahead of NFP; Gold at 3-month high

    The US dollar stuck near yesterday’s lows in Asian trading on Friday as investors maintain caution ahead of the January non-farm payroll numbers later today. The greenback has now given up all of its gains against the yen from last Friday when the Bank of Japan decided to cut interest rates to negative. The US currency was down at 116.80 yen in late Asian session.

    Comments from Cleveland Fed President Loretta Mester that it would be “premature to materially change” her outlook on the US economy did little to deter traders from paring back their expectations of further rate hikes by the Fed in the near term. Her comments contradicted with those of the Fed’s Dudley whose dovish remarks on Wednesday triggered the dollar’s slide.

    Meanwhile, worse-than-expected factory orders data out yesterday added to the recent batch of weak data for the US.

    Crude oil prices were steady in Asian session on thin trading ahead of the Lunar New Year holiday next week in China. US crude futures were slightly lower at $31.66 per barrel in late Asian session today.

    Gold prices, which have been buoyed by the weaker dollar, were off Thursday’s peak but remained near 3-month highs at around $1155 per ounce.

    The Australian dollar fell slightly following the release of weaker-than-expected retail sales figures for December. The aussie was slightly down at 0.7180 against the US dollar, while the New Zealand dollar was struggling to reclaim the 0.67 handle.

    In Europe, German factory orders declined by more than expected in December. However, the euro was unfazed by the data and was last trading at 1.1191 dollars. Yesterday, the single currency touched a 3½-month high of 1.1238 as the dollar sell-off intensified.

    The pound dropped below 1.46 dollars and was last at 1.4534 as the impact of yesterday’s Bank of England report receded. BoE Governor Mark Carney quashed speculation of a rate cut on Thursday, pushing cable to a one-month high. However, the Bank’s latest economic projections are not forecasting a rate hike until late 2017. This has helped the euro climb to 0.77 pounds.

    Coming up later today, US nonfarm payrolls will be on everyone’s attention along with the latest average earnings figures as traders watch for clues for the Fed’s next move.

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