The US dollar fell towards its biggest weekly loss in 12 weeks on Friday after a tepid US jobs report cooled market expectations for a near-term Federal Reserve interest rate hike, providing some relief for the embattled Japanese yen.
Broad dollar weakness lifted the euro to near a two-week high at $1.1472, up 0.6% on the week, while sterling firmed to $1.3380 for a 1.2% weekly gain, its best in nearly three months.
That also offered some respite for the Japanese yen, pushing it back above 161 per dollar, but markets remained nervous about intervention risks after a sudden jump on Thursday lifted the currency from a 40-year low of 162.84.
The dollar took a hit after U.S. job growth slowed sharply in June and payroll gains for the prior two months were revised lower, prompting traders to pare bets on a near-term Fed rate rise.
Markets are now pricing in about a 35% chance for a hike at the September meeting, according to LSEG data, down from 55% prior to the data. U.S. Treasury yields also pulled back from earlier highs, with those on interest rate sensitive 2-year notes snapping a three-day streak of gains with a 4 basis-point drop.
"We don't have a hike in our forecast, so this was in line with our views that we would get a turnaround here eventually and a weaker dollar," said Karl Steiner, head of analysis at SEB. "I wouldn't be surprised if we see some more downside."
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was roughly 0.3% lower at 100.68 after a 0.5% dip on Thursday. It is now down 0.7% for the week, the biggest weekly drop since early April.
-The Asahi Shimbun
