The US dollar slipped against the euro on Friday, giving up all the gains logged after a robust US jobs report, following comments from Federal Reserve Chairman Jerome Powell that the US central bank will be sensitive to the downside risks the market is pricing in. "We will be patient as we watch to see how the economy evolves," Powell told the American Economic Association on Friday.
Powell said the Fed is not on a preset path of rate hikes and suggested that it could pause on its policy tightening as it did in 2016. "Powell's comments that the Fed is prepared to alter policy expectations quickly and flexibly are weighing on the US dollar and giving risk sentiment a boost," said Eric Viloria, FX strategist at Credit Agricole in New York.
The euro was 0.13 percent higher against the greenback. The dollar's weakness was a reversal from earlier in the session when it rose after data showed US employers hired the most workers in 10 months in December while boosting wages. Nonfarm payrolls rose by 312,000 jobs, compared with an expected 177,000.
The report contrasts with reports this week signalling the global economy is slowing. China posted data showing factory activity contracted for the first time in 19 months in December, and there is evidence of weak manufacturing across much of Europe and Asia. Against the Japanese yen, the US dollar was 0.62 percent higher.
The greenback, which had slipped against the safe-haven Japanese yen in recent days amid worries about a slowdown in global growth, found support earlier in the session after China announced new measures to support its economy and hopes grew that upcoming US-China trade talks would make some progress. The Australian dollar recovered after being hit hard in Thursday's scramble for safety and was up 1.44 percent.
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