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With the biggest data set-piece of the month - the U.S. non-farm
payrolls report - due at 1230 GMT, the dollar edged higher
across the board <.DXY>.
The data will be closely watched by traders for a steer on when
they should expect U.S. interest rates to be hiked again.
Markets are currently pricing in an almost 60 percent chance of
another rate rise so far this year, after two so far.
Economists polled by Reuters expect U.S. employers to have added
179,000 jobs last month, above May's relatively small gain of
138,000.
But BMO currency strategist Stephen Gallo, in London, said the
wages and unemployment numbers would be more important for the
U.S. Federal Reserve than the headline jobs figure, as they have
been for a number of months.
"What the Fed is leaning on to justify normalization policy is a
pick-up in nominal wage pressure," he said.
"Provided that the unemployment drop is being driven by good
things – people in the labor force finding new work – that would
silence the Fed naysayers for a while. It reduces the risk of a
more dramatic selloff in the dollar short-term."
The dollar gained over half a percent against the yen to hit
113.84 <JPY=>, its strongest since May 16.
The BOJ said earlier on Friday it would buy an unlimited amount
of bonds, as it sought to put a lid on domestic interest rates
pushed higher by the broad sell-off in developed market bonds.
"(T)hey’ve said they’re going to stick to their yield target and
they proved today that’s what they’ll actually do," said
Commerzbank currency strategist Esther Reichelt, in Frankfurt.
"But the market seems to be speculating increasingly that
central banks will change their monetary policy to become more
restrictive, and there was even some speculation that ... maybe
the BOJ would also turn to this path."
Minutes from the Fed's June meeting released on Wednesday showed
that some policymakers wanted to announce the beginning of the
central bank's reduction of its massive debt portfolio by the
end of August, but others wanted to wait until later in the
year.
The euro edged down 0.1 percent to $1.1409 <EUR=>, not far from
14-month highs of $1.1445 touched last week.
European Central Bank policymakers are open to a further step
towards reducing their monetary stimulus but are likely to move
slowly out of fear of causing market turmoil, minutes of their
last meeting showed on Thursday.
Faster economic recovery in the euro zone is giving the ECB room
to pare its extraordinary stimulus measures, Bundesbank
President Jens Weidmann said on Thursday.
(Additional reporting by Lisa Twaronite in Tokyo; Editing by
Andrew Roche)
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