The dollar loitered around multi-week lows on Thursday, pressured by softer-than-expected U.S. labour data as traders awaited a fuller jobs report, which is expected to guide the timing of the Federal Reserve's pullback in bond buying.
The greenback was also dented by a rising euro, which had climbed to a one-month high of $1.1857 on Wednesday after a survey showed strong European manufacturing growth coupled with inflationary pressure from supply-chain snarls.
The euro touched its highest in a month at 130.44 yen on Wednesday and made a six-week peak of 86.02 pence. It has been further helped by hawkish comments from European Central Bank policymakers about their tapering plans.
Moves in the Asia session were slight as traders awaited Friday's U.S. non-farm payrolls data, with the euro holding firm at $1.1828 and the yen at 110.00 per dollar.
The Australian and New Zealand dollars hovered around the two-week peaks they made in the wake of Wednesday's disappointing U.S. ADP payrolls numbers, which showed 374,000 hirings last month against a forecast for 613,000.
"A perceived tilt towards being less dovish by the ECB, and the miss in the ADP print damaged the attempt at a dollar bounce," analysts at OCBC Bank in Singapore said in a note.
"The ADP miss puts more focus on Friday's NFP, but note that the ADP has not been a consistent early indicator."
Sterling also edged higher on the softer dollar, but found the going heavy into resistance around $1.38. It last sat at $1.3774.
The Australian dollar showed little reaction to a record trade surplus and held at $0.7366, shy of its overnight top at $0.7384.
The New Zealand dollar was supported above $0.70, last buying $0.7064, as traders' firmed bets on rate hikes in New Zealand in October and November. [NZD/]
Ahead on Thursday are U.S. trade figures, U.S. jobless claim figures and Euro zone producer prices. However, the week's major release is the U.S. non-farm payrolls data. Fed chair Jerome Powell said last week that the jobs recovery would determine the timing of the asset purchase tapering.
The dollar has been on the back foot since even before then as doubts about the tapering timeline crept in. The dollar index was steady at 92.517 on Thursday after falling to a four-week low of 92.376 overnight. It has lost almost 1.4% since it hit a nine-month high about two weeks ago.
The median payrolls forecast of 80 economists polled by Reuters is for 728,000 jobs to have been created in August, though as with previous months the forecast range varies enormously and stretches from 375,000 to over a million.
"Given the dollar flow, one could argue that the market is now positioned for NFPs to come in modestly below expectations – perhaps in the 550k/600k range," said Chris Weston, head of research at broker Pepperstone in Melbourne. "But that is just my guesstimate. Economists' ability to forecast payrolls is low." SINGAPORE (Reuters)