FOREX-Dollar steadies, yen touches two-week high ahead of key US jobs data

The dollar firmed against peer currencies on Friday after rebounding from a two-week low, as traders braced for a key U.S. jobs report due later in the day and grew cautious over tensions in the Middle East.

The dollar firmed against peer currencies on Friday after rebounding from a two-week low, as traders braced for a key U.S. jobs report due later in the day and grew cautious over tensions in the Middle East. Safe-haven bids, along with fresh warnings from Japanese authorities, helped to buoy the yen, which briefly hit a two-week high against the greenback.

The dollar has had a turbulent week, falling from a five-month high to a two-week low after an unexpected slowdown in U.S. services growth supported expectations of bringing interest rates down. It then rebounded after comments on Thursday from Minneapolis Federal Reserve President Neel Kashkari that rate cuts might not be required this year if inflation continues to stall.

The dollar index, which measures the greenback against a basket of major currencies, was last up 0.09% at 104.31. Officials including Fed Chair Jerome Powell have continued to focus on the need for more debate and data before interest rates are cut.

"Lack of coherent Fed messaging means data-dependency remains the order of the day," said Charu Chanana, head of currency strategy at Saxo. The market is focused on the release of the monthly U.S. employment report later on Friday. Economists polled by Reuters are forecasting 200,000 jobs were added in March.

"Markets will likely be sensitive to any surprise in the jobs data today to assess the path of monetary policy from here," Chanana said. Geopolitical tensions in the Middle East also have traders on guard. U.S. President Joe Biden threatened on Thursday to condition support for Israel's offensive in Gaza on it taking concrete steps to protect aid workers and civilians.

That has seen some safety bids coming into the yen, analysts said. "We saw a clear bid for the yen late on Thursday as Israel's tough talk in Iran prompted a call from Biden. And that means concerns over the Middle East conflict spreading will likely spill over to next week," said Matt Simpson, senior market analyst at City Index.

At the same time, Japanese authorities continue to jawbone against excessive currency weakness. Japanese Finance Minister Shunichi Suzuki on Friday reiterated the government's resolve to take appropriate action against sharp yen falls.

Meanwhile, Bank of Japan Governor Kazuo Ueda said the central bank could "respond with monetary policy" if yen declines affected the nation's economy in ways that are hard to ignore, the Asahi newspaper reported on Friday. Ueda also said inflation would likely accelerate from "summer toward autumn" as bumper pay hikes push up prices, his strongest hint yet that another interest rate hike was possible in coming months.

The yen strengthened to a two-week high of 150.81 against the greenback before paring gains to fall to 151.20. Japanese authorities will likely intervene in the currency market if the yen breaks out of a range it has been in for years and falls well below 152 per dollar, former top currency diplomat Tatsuo Yamazaki said on Thursday.

Elsewhere, the euro ticked down 0.1% to $1.0826, while sterling was last trading at $1.2622, down 0.14% as traders awaited the U.S. jobs data The Australian dollar fell 0.21% versus the greenback to $0.657.

The kiwi was down 0.16% at $0.60115. In cryptocurrencies, bitcoin last fell 0.82% to $67,397.00.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)