Dollar Plunges Ahead of Release of Non-Farm Payrolls Report on Friday

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Dollar Plunges Ahead of Release of Non-Farm Payrolls Report on FridayThe dollar fell on Tuesday as the market fretted ahead over a key U.S. employment report that is due on Friday and shrugged off data that shows U.S. manufacturing is picking up.

The dollar index plunged 0.12 percent to 80.008, down from a two-week peak of 80.296 the previous day after Federal Reserve Chair Janet Yellen backed the Fed’s loose monetary policy.

The euro rose 0.26 percent against the dollar to trade at $1.3810 in New York. The dollar, however, rose against the yen to 103.61, the highest level since March 7 as data showed U.S. factory activity grew for the second straight month.

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“The focus is on U.S. data,” Shaun Osborne, a Toronto-based currency strategist at TD Securities told Reuters.

The U.S. March non-farm payrolls data will be released this coming Friday. The yen slid after Japan’s Tankan research expressed doubts whether the economy would improve further in 2014.

“If there is clear weakness in the economic data from Japan, we could see the BOJ ease policy,” said Yujiro Gato, a foreign exchange strategist at Nomura. “But we do not expect that policy easing to take place anytime soon, perhaps in the third quarter.”

“So those expecting the BOJ to ease in the short term could be in for a disappointment. But any dips in dollar/yen should be bought into, and we eventually expect it to rise to 104 yen.”

The euro rose 0.55 percent versus the yen to trade at 142.92 yen. It had earlier reversed its decline that saw hit Monday’s low of $1.3721 against the dollar over fears that the European Central Bank may roll out measures to combat price pressures.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com