Dollar stalls in Asia

The dollar stalled on Friday, on track to post weekly losses against the euro and yen, as the market's appetite for risk receded amid a tumble in equities that pulled the greenback further away from its recent highs. The dollar fetched 122.60 yen after capping off three straight days of losses on Thursday and was enroute for a 0.4 percent loss on the week.
It had scaled a 2-1/2-month high of 123.60 on Monday after a bullish US jobs report heightened prospects of the Federal Reserve raising interest rates in December. The dollar also sank against the Swiss franc. The dollar tends to lose ground against safe havens such as the franc and yen when investor appetite for risk weakens. "The Fed will now have to actually hike rates for the dollar to gain further, so focus will begin drifting towards the December policy meeting and how 2-year Treasury yields move," said Koji Fukaya, president of FPG Securities in Tokyo.
The dollar has a rough positive correlation with Treasury yields, and the 2-year bill yield spiked to a 6-1/2-year high late last week on rate hike expectations. "Dollar/yen surging to 123.60 looked overdone and we are now seeing a consolidation. On the other hand, the dollar cannot drift too low due to the US-Japanese yield differential theme. I don't see the currency falling much below 122.00 yen," Fukaya said.
Wall Street saw its worst session in more than a month on Thursday on lower commodity prices and comments by New York Fed President William Dudley who gave the latest round of hints about an approaching rate hike. The euro, which was hit earlier on Thursday by dovish-sounding comments from European Central Bank President Mario Draghi, benefited from the broad dollar weakness.
The euro traded at $1.0796 after rebounding sharply from a low of $1.0691 stooped on comments by Draghi, who singled out the currency's more robust performance since May as one driver for a "weakening" outlook on inflation. The common currency was poised to gain 0.5 percent on the week thanks to its rally overnight although it had sunk to a 6-1/2-month trough of $1.0674 on Tuesday.
The Australian dollar remained on the front foot with momentum from Thursday's much stronger-than-expected local jobs report buffering the slide in commodities. The Aussie nudged up 0.1 percent to $0.7134 after rallying more than 1 percent on Thursday as the upbeat employment data reduced the odds of a near-term rate cut by the Reserve Bank of Australia. Other commodity currencies such as the Canadian dollar did not fare so well amid declining crude oil prices.