* Dollar steadies after drop, index down about 0.8 pct for
* Dollar at 116.10 yen, euro close to $1.06, third week of
* Sterling fades after 2 up days, peso holds intervention
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Jan 6 The dollar clawed back ground on
Friday but was heading for a second straight weekly loss, having
tumbled the previous day on a rare piece of poor U.S. data and
apparent action by Chinese authorities to shore up the yuan.
Most currencies were range trading ahead of U.S. non-farm
payrolls due at 1330 GMT (8:30 a.m. ET) and the dollar was
drifting, up 0.6 at 116.05 yen having also nudged the
euro down to $1.0590.
Sterling slipped after two days of gains and ahead
of a decision in the next week or two on parliament's role in
Brexit negotiations, while Mexico's peso steadied having
been boosted by a $1 billion currency intervention on
"It's a bit quieter following the moves yesterday and going
into the payrolls it will take a fairly strong print especially
on the earnings side to reinvigorate the stalled dollar rally,"
said Credit Agricole head of G10 FX strategy Valentin Marinov.
"My hunch is that investors are just waiting for the Trump
inauguration," which is on Jan. 20.
A Reuters poll on Friday showed that the dollar is expected
to keep strengthening against the euro in the months ahead with
even chances of reaching parity this year.
President-elect Trump is already giving plenty of hints
about his likely plans once he take office, however. In his
latest Twitter outburst he criticized reports that U.S.
taxpayers would pay for his planned border wall with Mexico.
"The dishonest media does not report than any money spent on
building the Great Wall (for sake of speed), will be paid back
by Mexico later!" Trump said.
The bigger focus for traders though was the upcoming
non-farm payrolls, expected to have increased by 178,000 jobs
last month after a similar rise in November, according to a
Reuters survey of economists.
The U.S. unemployment rate, though, is forecast to tick up
to 4.7 percent from a nine-year low of 4.6 percent in November.
The dollar index, which measures the greenback against six
of the world's top currencies, was at up 0.1 percent at 101.68
having set a 14-year high of 103.820 three days ago on a
seeming resumption of the dollar-bullish 'Trump trade'.
It crumpled on Thursday though following lacklustre U.S.
employment data and having been buffeted by a surge in the
Chinese yuan as Beijing made moves to shake out large bets
against its currency.
There was more action in Beijing overnight as borrowing
rates for the offshore yuan or CNH jumped to 61 percent,
their highest in a year, and the CNH headed for its biggest
weekly gains since it was introduced in 2010.
Most G10 currencies, from the Canadian dollar to the
Swiss franc and Scandinavian Swedish and Norwegian
crowns dipped meanwhile as the U.S. dollar added 0.2-0.3
percent against them.
The Aussie and Kiwi dollars managed to hold
their own at $0.7338 and $0.7019. Both though had briefly hit
three-week highs overnight after Australia posted its first
trade surplus in almost three years in November.
"The global economy looks to be in better shape compared to
a year ago so the (current) risk-off trend could be limited,"
said Shin Kadota, chief Japan FX strategist at Barclays in
"But China-related headlines appear to have given
participants a chance to adjust positions which had excessively
favoured the dollar."
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Reporting by Marc Jones; Editing by John Stonestreet and