Previous session overview

The yen fell against the dollar in Asia on Friday as reports that the Bank of Japan may take additional steps to ease monetary policy led investors to speculate Japanese interest rates might fall, reducing the attractiveness of yen-denominated assets.

Non-Japanese investors jumped on the reports and pushed the yen lower. But the reaction by Tokyo dealers was limited. They said even if the BOJ reinforces the lending facility, the yen-weakening effects will be limited.

As of 0450 GMT, the greenback was at JPY89.25 from JPY89.09 Thursday in New York. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 80.510 from 80.571.

Euro has traded with a soft undertone in Asia but staged a pullback to 1.3694 in European morning. Price fell sharply from there and picked up more downward momentum after the ECB kept rate remained unchanged at 1% as expected. After the rate decision, ECB's Trichet said euro zone economy is expected to grow at moderate pace in 2010 and inflation will be around 1% in near term.

The British pound strengthened vs. the dollar overnight, but soon erased those gains after data from the US. There was little reaction from financial markets after the Bank of England kept interest rates and quantitative easing on hold.

The Australian dollar and interest rate futures have nudged lower in a lackluster Asia session Friday as dealers await all important U.S. employment figures due later.

Market expectation

The dollar's topside will be capped at around JPY90.00 for the time being, despite the reports, dealers said, as any BOJ easing is unlikely to do much to improve investor sentiment.

EURUSD trades around USD1.3578. Offers seen placed at USD1.3605/10, with Asian traders earlier noting European name offer sitting behind at USD1.3620. Further offers now reported at USD1.3630/35. Bids remain in place at USD1.3550 (USD1.3549 61.8% USD1.3433/1.3736), more at USD1.3520 with stops below.

Pound gets a lift above USD1.5030 on reports of sterling-yen demand. Offers seen placed at USD1.5050/55. Support remains ahead of USD1.5000; with further demand noted close behind at USD1.4990.

European stocks are expected to open marginally higher Friday, taking their cue from a late rally on Wall Street.

Looking ahead, investors will pay attention to U.S. non-farm payrolls data due at 1330 GMT. The dollar may spike against the yen briefly if the jobs data beat economists' forecast.

Disclaimer: the data made available by Dukascopy (Suisse) SAis for informational purposes only. Publication of this data by Dukascopy (Suisse) SA does not constitute provision of investment advice and Dukascopy (Suisse) SA assumes no responsibility with regard toany information, forecast or recommendation herein contained and assumes no responsibility with regard toany losses resulting from any activities conducted the basis of this data, including any investment decisions.

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