The dollar rose on Friday after a US policymaker played down the chances of aggressive monetary easing, prompting investors to take some profit on the greenback's recent falls before key US jobs data. St. Louis Fed chief James Bullard, a voting member this year on the US Federal Reserve's rate-setting committee, told CNBC that policymakers face a tough decision at next month's policy meeting as the economy has slowed but is still bumping along.
Market speculation the Fed will resume quantitative easing when it meets on November 2-3 to shore up the economy has increased. But Bullard did not rule this out, saying more help from policy may be needed to push up inflation. "Bullard is confirming himself as an incrementalist who is not in the very aggressive easing camp," said Chris Turner, head of FX strategy at ING.
At 1121 GMT, the euro was down 0.2 percent at $1.3896, knocked off an eight-month high of $1.4030 hit on the EBS trading platform on Thursday. It hit a session low of $1.3843 after the Bullard comments. Traders said options expiries at $1.3910 and $1.3950 were due later in the day.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.2 percent at 77.544, moving above an 8-1/2 month low of 76.906 on Thursday. It has support at 76.60, the index low for 2010 hit in mid-January.
The Australian dollar fell 1 percent to a session low of $0.9708 on Bullard's remarks. The US dollar's slide has benefited high-yielding currencies like the Australian dollar, which hit a 28-year high of $0.9918 on Thursday. Market players were wary about a surprise improvement in the US jobs data as it would temper expectations of aggressive Fed easing. The dollar traded at 82.26 yen, close to a 15-year low of 82.11 yen hit on Thursday and edging ever closer to its 1995 record low of 79.75 yen.
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