Morning Forex Overview

Previous session overview

The dollar rose slightly against the yen in Asia Friday as stable Japanese share prices prompted hedge funds to try to trigger automated stop-loss buying orders.

The U.S. unit stood at JPY84.29 as of 0450 GMT from JPY84.21 in New York Thursday as Asian hedge funds were modestly buying the dollar in the thinly traded market.

The dollar index (DXY), a measure of the U.S. unit against a basket of currencies, fell to 82.384 from 82.401 late Thursday.

The euro was at JPY108.09 and USD1.2822 from JPY107.96 and USD1.2821 overnight. A lack of market participants ahead of the U.S. data kept the euro to narrow trading bands, dealers said.

European Central Bank President Jean-Claude Trichet said Thursday the euro-zone central bank would extend its tool box of additional bank funding on a "full allotment" basis, citing continued uncertainties in the economy.

The British pound edged lower in Asia on profit-taking after Wednesday's rise from USD1.5337 to USD1.5492 and fell to USD1.5373 in Europe on cross selling in sterling versus euro (eur/gbp surged from 0.8283 to 0.8348) after the release of weaker-than-expected U.K. housing data. Later, despite cable's brief recovery to USD1.5417, renewed selling interest sent Pound lower to USD1.5350 in NY before staging a recovery.

The Australian dollar moved sideways in a quiet Asian session Friday as traders sat on their hands ahead of a key report on the U.S. job market overnight.

Market expectation

Still, it is very possible that the greenback will reverse course if the much-anticipated U.S. non-farm payrolls data due later in the global day fuel investor speculation on additional easing measures in the near term by the Federal Reserve.

European stocks are expected to open slightly higher Friday, following a positive close on Wall Street, but gains are likely to be limited as investors keep to the sidelines ahead of the nonfarm payrolls release at 1230 GMT.

Economists forecasts the data to show a loss of 110,000 jobs in August from July, when payrolls also fell by 131,000.

If indeed the data turn out worse than expected, the greenback may fall toward JPY83.58 the recently marked 15-year low.

Sterling, along with other currencies, is likely to consolidate in narrow ranges pending the U.S. labor figures later Friday.