Hong Kong: Asian investors trod warily ahead of a crucial US jobs report Friday while the dollar edged down against most currencies the day after a surprise slump in the country's factory activity.
After this week's rally in the greenback following Federal Reserve boss Janet Yellen's upbeat assessment of the US economy and hint at a possible interest rate hike, the unit tumbled Thursday after the closely watched ISM manufacturing gauge hit an eight-month low.
The news threw a spanner in the works a day before the release of non-farm payrolls figures that are largely seen as a barometer of if and when the central bank will move on rates.
"There is potential for markets to whipsaw should we see robust US jobs data tonight," Sharon Zollner, a senior economist in Auckland at ANZ Bank New Zealand, said in a client note, according to Bloomberg News.
"A stronger US labour market isn't new news for the Fed or its watchers, rather, it is areas such as manufacturing and retail that are currently causing concern, not to mention a generalised lack of inflation. But nonetheless, payrolls data is traditionally a big market mover, so buckle up."
In early trade the euro was at $1.1200, flat from late in New York but well up from the $1.1131 in Asia earlier Thursday. The pound fetched $1.3289 against $1.3270 in US trade and $1.3139 in Asia. It was up at 103.38 yen against New York's 103.23 yen.
Oil bounces
It also retreated against higher-yielding currencies, including the Australian, Singapore and Canadian dollars, and South Korea's won. Asian stock markets swung to and fro through the morning as traders jostled for positions ahead of the jobs report.
Tokyo ended the morning 0.1 per cent higher, while Hong Kong added 0.6 per cent and Shanghai was up 0.3 per cent. Sydney shed 0.7 per cent and Singapore 0.2 per cent. Seoul was flat.
There was also a sense of unease after the International Monetary Fund on Thursday said it planned to downgrade its US economic forecasts in October, warning generally of a global "low-growth trap" if G20 governments meeting this weekend in China failed to act decisively and soon.
On oil markets the weaker dollar and bargain hunting helped both contracts rise one per cent, a day after diving more than three percent in reaction to comments from Russia suggesting limits on output may not be necessary.
West Texas Intermediate was at $43.58 and Brent fetched $45.88 Friday, although they are down almost nine percent from last Friday's close on fading hopes for a meeting between Moscow and OPEC this month to discuss a global supply glut.
