The greenback shed over 4 percent against a basket of major
currencies in the first quarter, as turbulent global markets and an
increasingly cautious tone from the Fed pushed back expectations for
when rates might rise again, after the first increase in almost a
decade in December.
Against the euro, the dollar fell to a 5 1/2-month low of $1.1413 on
the first day of the European Central Bank's expanded asset-purchase
programme, which the ECB hopes will weaken the euro.
The dollar index fell 0.2 percent, taking its weekly losses to 1.9
percent - its worst week in eight.
The U.S. nonfarm payrolls report, due at 1230 GMT, is one of the
most closely watched releases of the monthly data calendar. But some
analysts said a strong report would not have the impact it often
has, because it would need to be backed up by a more hawkish tone
from the Fed to translate into dollar strength.
"But this has not been a normal week, in the sense that the Fed has
dropped some very specific hints about the overwhelming policy bias
at this juncture," said BMO Capital Markets currency strategist
Stephen Gallo. "Fed dovishness should still hold risk aversion and
the broad dollar back under most circumstances."
Earlier in the week, Fed Chair Janet Yellen highlighted risks to the
global economy and said the Fed should proceed "cautiously" on
After her speech, interest rates futures implied that traders saw
only a 5 percent chance the Fed would raise rates at its next policy
meeting, on April 26-27. They see only around a 50 percent chance
that the Fed will raise rates at all this year.
The payrolls report is expected to show that employers added 205,000
jobs in March and average monthly earnings rose 0.2 percent after
February's 0.1 percent decline.
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"The most important number for the U.S. dollar is the average
earnings ... but even if we see a better number, this will create
hope but it will not convince the market that everything is OK,"
said Commerzbank currency strategist Esther Reichelt, in Frankfurt.
"I don't expect substantial dollar appreciation, but rather for it
to remain cautious."
Against the yen, the dollar slipped about 0.4 percent on Friday to
112.17 <JPY=>. It slid more than 6 percent against the yen in the
first quarter, its biggest loss since 2009, as market turmoil sent
investors into the perceived safety of the Japanese currency.
(This story has been refiled to correct lead paragraph to show
dollar's weakest quarter in 5 1/2 years, not 6 1/2)
(Additional reporting by Lisa Twaronite in Tokyo, editing by Larry
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