Dollar trade on hold

Good Morning,

- Dollar trade on hold, near 10-month peak after last days rally, with all eyes now on US payrolls data later today.

- S&P 500 suffered its biggest daily loss since April, but Asian shares pared losses on Friday as data showing a surprisingly strong pick up in Chinese manufacturing. Japan's Nikkei -0.63%, Hong Kong's Hang Seng -0.78% (07:04 GMT), Korea's Kospi -0.15%, Australia's ASX 200 -1.34% and China's Shanghai -0.71%.

- The dollar index was last steady at 81.479, having risen 2.1 percent in July to a 10-1/2 month peak of 81.573.

- Also the common currency was under pressure on Thursday by data that showed annual inflation in the euro zone fell in July to its lowest since the height of the financial crisis in 2009.

- Bank of America on EUR/USD: In the very near term, EUR/USD is at risk of a squeeze higher, given the completing intra-day Elliott wave counts and bullish momentum divergences," BofA warns. "In the sessions ahead, evidence warns of a near term consolidation /squeeze higher potentially into the 1.3521 /1.3503 zone. However, Bounces are corrective and should not exceed the 1.3574 zone before larger downtrend resumes," BofA clarifies. "Ultimately, this bounce must be sold, but bears should be cautious at current levels," BofA advises. In line with this view, BofA maintains a short EUR/USD position from 1.3594 targeting 1.3212.

- The U.S. jobs report due at 1230 GMT could provide a farther big move in the markets. A Reuters survey showed payrolls probably increased by 233,000 in July. While that would be less than June's hefty increase of 288,000 jobs, it would still represent a sixth straight month that employment has expanded by more than 200,000, a stretch not seen since 1997.

- Chicago purchasing managers index unexpected, and inexplicable, 10-point plunge to 52.6 in June, data showed yesterday. That was the sharpest drop since late 2008.

- IMF: Japan's economic risks over the medium term are tilted to the downside as the government could fail to deliver the additional reforms needed to lift potential growth and pare public debt. PM Shinzo Abe needs to go beyond the second installment of his growth strategy announced in June and take even bolder steps to increase the labor supply and loosen regulations in the services sector. The Bank of Japan does not need to ease monetary policy again now as prices for a broader number of goods are rising, but the central bank should be ready to increase risk asset purchases quickly if growth weakens.

- Argentina's debt default threatens to worsen trade tensions in South America, adding to the economic woes of Brazil in a tense election year and causing headaches in Uruguay as the Argentine economy looks likely to plunge deeper into recession.

- Argentina defaulted on Thursday after losing a long legal battle with hedge funds that rejected the terms of a debt restructuring in 2005 and 2010, putting pressure on the peso and boosting inflation.

- The official measure of Chinas industrial activity (PMI) rose to 51.7 in July from 51.0 in June, beating forecasts of 51.4 and the highest in 27 months.

- RBA Index of Commodity Prices: Preliminary estimates for July indicate that the index declined by 0.9 per cent (on a monthly average basis) in SDR terms, after declining by 2.2 per cent in June (revised). The largest contributors to the decline in July were falls in the prices of iron ore, oil and wheat.

- U.S. crude oil fell to its lowest since March around $97.66 a barrel, while Brent was off 21 cents at $105.81. Brent lost more than 6 percent in July, its biggest monthly decline since April 2013.

- Watch today: US payrolls data & manufacturing.

Have a nice Weekend!