Previous session overview

The dollar stabilized against other key currencies in Asian trade Friday following sharp gains Thursday as a mass selloff in commodities pushed the greenback higher.

Oil prices were hit especially hard, with New York Mercantile Exchange crude futures tumbling below USD100 a barrel for the June contract, while silver futures dropped 8% Thursday in New York. Traders have in recent months been trading commodities and higher-yielding currencies against the dollar in cross-asset plays.

The ICE dollar index, which tracks the dollar against a basket of currencies, was at 74.112 from 74.086 in late New York trade. Among individual currencies, the dollar rose to JPY80.48 as of 0450 GMT, up from JPY80.05 late in New York and an earlier low of JPY79.57 Thursday, the lowest since a round of yen-selling intervention March 18.

The dollar recovered against the yen, even though Japanese Finance Minister Yoshihiko Noda offered a bit of a green light to dollar selling by suggesting Japan was in no rush to intervene again in the market. 

The dollar was similarly steady against other currencies. The euro was at USD1.4545 from USD1.4541 late Thursday in New York and the U.K. pound was at USD1.6388 from USD1.6384. 

The Pound now mixed, has its next data point with the 0830 GMT release of U.K. April producer prices. With the Bank of England on hold, investors may play interest-rate differentials, especially if U.S. labor data later show fresh weakness.

The Australian dollar was higher against its U.S. counterpart as well as the yen following a hawkish statement from the Reserve Bank of Australia that signaled its intention to raise interest rates further at some point as it ramps up its core inflation forecasts. The Australian dollar is at USD1.0693 from USD1.0563 late Thursday and at JPY86.04 from JPY84.62.


Market expectation

The USDCHF begins to rally on its oversold condition, easing the immediate downside pressure, according to technical analysts. The rebound has started to erode the 0.8681 accelerated downtrend and we look for a deeper near-term recovery towards the 0.8840 March low, say analysts. Should this level be breached it would introduce scope to 0.9020, the 38.2% retracement of the same move and the three-month resistance line.

Analysts similarly suggested intervention was probably not at hand. Dealers said in research note that it believed intervention would take place only if the yen gained strongly on a trade-weighted basis, market moves became erratic, and the strong yen led to a broad stock market selloff. They said none of these factors are yet in place. Therefore, in terms of USDJPY, the main driver will remain relative U.S.-Japanese interest rates.

An important factor, traders said, will be U.S. jobs data for April due at 1230 GMT.

Economists forecast that the closely watched figure for nonfarm payrolls will rise 185,000, less than the 216,000 gain in March.