Dollar on recovery track in Asia ahead of US job data


Posted at Jun 06 2008 11:07 AM | Updated as of Jun 06 2008 07:07 PM

Agence France Presse

TOKYO - The dollar inched up in sluggish Asian trade on Friday as market participants stayed on the sidelines ahead of a key monthly US payroll report, dealers said.

The dollar inched upwards to 106.05 yen in Tokyo morning trade from 105.93 in New York late on Thursday.

The euro edged down to 1.5589 dollars from 1.5590 but rose to 165.30 yen from 165.20 yen.

"It's difficult to take positions as players want to see the US non-farm payroll data" to be released later in the day, said Hironobu Hagi, deputy general manager at the capital markets division of Shinsei Bank.

"A positive employment report should strengthen dollar-buying momentum as the dollar has steadily been on course to recovery," Hagi said.

"Recently, factors surrounding the dollar have become quite positive, but the dollar's downside risks have yet to be erased," he said. "If the dollar continues recovering at a faster pace, selling pressure would emerge."

Euro-buying sentiment subdued in Tokyo after the European single currency surged overnight as the European Central Bank warned that interest rates could be hiked as early as next month to cope with rising inflation.

ECB president Jean-Claude Trichet issued the warning after US Federal Reserve chairman Ben Bernanke signalled that US rates might not be cut again in the near term, which supported the US currency.

Dealers said Bernanke's and Trichet's comments together suggested that both central banks were coming to a common understanding that inflation now represented a greater risk than slowing growth.

The ECB kept its interest rate on hold at 4.0 percent on Thursday, while the Fed has slashed interest rates since September in an effort to keep the US economy on track.