The dollar firmed to six-week highs against the yen on Friday, on track for weekly gains against most rivals as investors awaited US jobs data that is likely to reinforce expectations of a Federal Reserve interest rate hike next week.
A surprisingly robust private US jobs report from ADP heightened bets the monthly non-farm payrolls release later on Friday will give the Fed more reason to raise rates at its March 14-15 meeting - as many central bank officials have recently signalled it intends to do.
Markets were pricing in more than a 90 per cent chance of a hike after Wednesday's private-sector payrolls report showed employers added 298,000 jobs in February.
Analysts polled by Reuters forecast that U.S. employers likely added 190,000 workers last month, fewer than January's 227,000 and average hourly earnings likely grew 0.3 per cent following a 0.3 per cent fall in January.
“No one is expecting anything particularly weak, so it looks like that's building the case for a hike for March,” said Mitul Kotecha, head of FX and rates strategy for Barclays in Singapore.
“The only thing is that it does seem as if a lot is priced in, in terms of the dollar,” he said. “I wonder how much more can be priced in from here? A lot is already in the price.”
The dollar was up 0.2 per cent at 115.21 yen, firming to its highest levels since January 27, and up 1 per cent for the week.
“The dollar has risen as U.S. Treasury yields went up this week, but there appears to be some resistance on the upside around the middle of the 115-yen level,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.
The benchmark 10-year Treasury yield rose as high as 2.624 per cent in Asian trading on Friday, its highest since December 15, according to Reuters data, and well above Thursday's US close of 2.598 per cent as investors factored in a US rate hike.
The euro was up 0.2 per cent at $1.0594, but still down 0.3 per cent for the week even after comments from European Central Bank head Mario Draghi pulled it off its session lows on Thursday.
Draghi said the ECB removed a reference to using all available measures to induce growth and inflation “because the sense of urgency is not there".
He also said the Governing Council had discussed removing a reference to lowering interest rates in its forward guidance, and had increased its inflation and growth profile for the euro zone next year.
Against the yen, the euro rose 0.4 per cent to 122.07 , ascending to its highest levels since early February and up 0.8 per cent for the week.
Draghi's optimism pressured the pound, which fell as low as $1.2134 overnight, its deepest trough since January 17. It was last slightly lower on the day at $1.2160, down more than 1 per cent for the week.
The dollar index, which tracks the greenback against a basket of six major rivals, edged up 0.1 per cent to 101.90 , and was on track to gain 0.4 per cent for the week.