Investing.com - The yen gained in Asia on Friday on safe-haven demand as the British pound fell sharply on growing concerns over the terms of a break from the European Union following comments by the government earlier this week the formal move would come by March of next year.
Concerns that France and other leading eurozone countries would demanding tough Brexit conditions sparked the sharp and surprise Asian fall, with traders suggesting a thin market ahead of U.S. payrolls allowed the sharp drop and China's return to the markets next week after a week-long holiday.
GBP/USD came under renewed pressure on Thursday after Prime Minister Theresa May's comments on the Bank of England's alleged loose monetary policy.
GBP/USD traded at 1.2420, down 1.56%, while USD/JPY changed hands at 103.73, down 0.20%. AUD/USD traded at 0.7574, down 0.15% and EUR/USD traded at 1.1136, down 0.12%.
In Japan, average cash earnings for September dropped 0.1%, widely missing the 0.5% gain seen year-on-year for the first drop in three months following growth in July and June.
The government maintains the view that wage hikes are gradual and need close watching. Firms are slow to raise wages amid uncertainty over global and domestic growth. Consumer spending has been sluggish in the face of a slow wage recovery despite labor shortages in some sectors.
Earlier in Australia, the September AIG construction index came in at 51.4, a jump of 4.8 points into expansion from 46.6 in August.
"While residential building remains at healthy levels, the easing of current activity and new orders recorded in the Australian PCI suggests that we are near the top of the current cycle and that residential building is losing its position at the forefront of the restructuring of the economy," said I head of policy Peter Burn, who noted road and rail projects underway or under consideration are aiding the economy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.21% to 96.86.
Market participants were focusing on Friday’s U.S. nonfarm payrolls report for further indications on the strength of the job market, as the Federal Reserve has indicated that future interest rate decisions will be data-dependent.
The consensus forecast is that the data will show jobs growth of 175,000 in September, following an increase of 151,000 in August. The unemployment rate is forecast to hold steady at 4.9%, while average hourly earnings are expected to rise 0.2% after gaining 0.1% a month earlier.
A strong nonfarm payrolls report would reinforce the view that a U.S. rate hike in December may be on the cards, after hawkish signals from senior Fed officials in recent weeks revived speculation of a rate hike before the end of the year.
According to Investing.com's Fed Rate Monitor Tool, investors are pricing in a 63.4% chance of a rate hike by December. November odds were at 14.5%.
Overnight, the dollar held onto gains against the other major currencies on Thursday, boosted by the release of strong U.S. jobless claims data and as investors turned their attention to Friday’s key U.S. employment report.
The dollar was boosted after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending October 1 decreased by 5,000 to 249,000 from the previous week’s total of 254,000. Analysts had expected jobless claims to rise by 3,000 to 257,000 last week.
In the euro zone, data earlier showed that German factory orders rose 1.0% in August, beating expectations for an uptick of 0.2%. German factory orders increased by 0.3% in July, whose figure was revised from a previously estimated 0.2% gain.
Meanwhile, speculation over the possibility that the European Central Bank could scale back its asset purchase program sooner than expected subsided after officials denied the rumors, saying that Governing Council “has not discussed these topics”.