There was a significant reversal as the dollar regained ground, especially against the yen, which rallied back above the 104.00 level from lows below 103.00.
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Elsewhere, pound was on track to end the week on an upbeat note after a report indicated British businesses were growing more confident and a reading on the construction industry showed the sector was overcoming Brexit jitters.
The ICE Dollar Index DXY, -0.35% a measure of the buck against a basket of six currencies, was down 0.1% at 95.8860 in recent trade.
Last week, Federal Reserve Vice Chairman Stanley Fischer said the US economy was close to full employment, and that the Fed could still raise rates twice before the end of 2016, if the data hold.
The data came a day after Markit said its United Kingdom manufacturing PMI rose to a 10-month high this month, easing concerns over a potential economic slowdown in the United Kingdom following the June 23 vote to leave the European Union.
Market participants were eyeing the US nonfarm payrolls report due later Friday for further indications on the strength of the job market after Federal Reserve officials recently indicated that the pace of interest rate increases will be data dependent.
“The flags were raised yesterday when we had the most ill ISM manufacturing data and if we combine this with today’s wage weak wage growth, it all has failed investors’ s hopes of cementing a rate hike”.
Dollar weakness suggests traders are anxious that the weak reading on manufacturing could prevent the Fed from raising interest rates this year.
“I would think markets will gradually price in a rate hike unless the payrolls come below 150,000”, said Minori Uchida, chief currency analyst at the Bank of Tokyo-Mitsubishi UFJ in Tokyo.
“It might cause the Fed to reconsider, but it wouldn’t take it off the table completely”, Cieszynski said.
EUR/USD slipped 0.13% to at 1.1183, just off Wednesday three-week low of 1.1121.
If there is a miss in the actual data from the estimates, expect a correction in the Dollars strength and we should be back to the pre-Jackson Hole prices.
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The figure was comfortably ahead of the 46.5 reading analysts expected and signalled the slowest pace of decline since the downturn began in June.
