Dollar rises ahead of U.S. jobs report

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.01% to 103.57

The dollar was up on Friday morning in Asia, set for a fifth winning week ahead of the latest U.S. jobs report that will likely set the stage for further aggressive monetary policy tightening.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.01% to 103.57 by 4:15 AM GMT. The index is up 0.35% for the week, after hitting 103.94 in the previous session for the first time in two decades.

The USD/JPY pair was up 0.38% to 130.62.

The AUD/USD pair inched up 0.01% to 0.7112 while the NZD/USD pair inched down 0.02% to 0.6426.

The USD/CNY pair was up 0.33% to 6.6779 and the GBP/USD pair inched up 0.03% to 1.2368.

The U.S. jobs report, which includes non-farm payrolls, will be released later in the day.

The greenback was up for a ninth week against the yen, gaining 0.46% on the week and taking it closer to the previous week's 20-year high of 131.25. Benchmark 10-year U.S. Treasury yields resumed a climb to top 3.1% overnight, after dipping lower immediately after the Federal Reserve hiked its interest rate to 1% on Wednesday.

The dollar initially dropped sharply that day, after Fed Chairman Jerome Powell said that a 75-basis point hike is not under active consideration. However, it clawed back those losses a day later, which suggests that the retreat had more to do with positioning than any change in views, according to analysts at National Australia Bank (NAB).

Powell was unambiguously hawkish, NAB senior market strategist Gavin Friend said in a client podcast.

‘They will do what they have to do to bring inflation to heel,’ buoying U.S. yields and the dollar, he added. NAB revised its currency forecasts earlier in the day, predicting the dollar to strengthen to $1.02 per euro and $1.20 versus sterling by end-September 2022, but easing slightly to 125 yen by that time.

The euro edged down 0.11% to $1.0529 on Friday and was set for a 0.12% weekly drop. However, the single currency has mostly traded sideways since tumbling to a five-year low of $1.04695 during the previous week.

Elsewhere in Europe, the pound was set for a 1.81% loss for the week. It fell 2.22% overnight, the most in two years after the Bank of England warned of the risk of recession and hiked its interest rate to 1% as it handed down its policy decision on Thursday.