Forex Market Update: Dollar Slips Against Euro; Edges Higher Against Yen

The U.S. dollar traded mixed on Friday. While the U.S. unit edged higher against the yen during European trading hours amid widespread  that the Labor Department’s non-farms data will show marginal improvement over January, it slipped against the euro as the single currency continued extending gains from Thursday after the European Central Bank (ECB) left its monetary policy unchanged.

Earlier today, the dollar jumped to a 42-month high vis-à-vis yen on Friday, crossing 95.70 level as U.S. stocks continued to rally with Dow Jones extending its all-time-high level while NASDAQ Composite and S&P 500 closing slightly short of their record levels in the wake of continued barrage of better than expected U.S. economic data releases.

“It’s going to be really interesting to watch how the dollar reacts to the nonfarm payrolls number,” said Ian Stannard, European head of currency strategy at Morgan Stanley in London, according to the Wall Street Journal.

“The dollar is beginning to change the way it behaves and it is responding to the way equities move. If we get a positive [non-farm payrolls numbers] number, then I think the dollar will remain well supported as equity markets move higher. The dollar against the yen will be the currency pair that moves the most on this,” added Stannard.

The euro meanwhile posted a record high against the greenback this week at $1.3135 as the ECB stood firm against any further monetary easing. There were talks in some quarters that the ECB might further cut down benchmark interest rates to shore up the region’s economy.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.