Forex – Dollar drifts weaker in Asia as U.S. jobs to set tone – The dollar was slightly weaker in Asia on Friday in sideways trade with a manufacturing PMI from Caixin noted though trade was quiet even as China markets reopened after a week-long break.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.05% to 99.88. USD/JPY changed hands at 113.06, up 0.23%, while AUD/USD fell 0.04% to 0.7653.

The China Caixin manufacturing purchasing managers’ index (PMI) for January slowed from December, missing a Reuters poll forecast, but continued to show the mainland’s economy was recovering. The reading came in at 51.0 in January, down from December’s 47-month record of 51.9 and below a Reuters’ poll forecast for 51.8. A reading above 50 indicates expansion, while a reading below signals contraction.

AUD/USD slipped after the data to as low as $0.7638 from $0.7660 before the release. China is a key market for Australia’s exports of raw materials, tying its economic prospects to the mainland.

On Tuesday, the official manufacturing PMI came in at 51.3 for January, down a smidgen from 51.4 in December, but still better than a Reuters poll forecast of 51.2.

The official figures tend to focus on larger companies, while the private China Caixin PMI focuses on smaller and medium-sized firms.

Overnight, the dollar edged up Thursday in the U.S. with investors skittish on political risk, sending the safe-haven Japanese yen into gains and investors looking ahead to jobs data at the end of the week for direction.

The Trump administration has rattled leaders in Mexico, Germany and Australia in the past week during phone calls by President Donald Trump that have touched on key aspects of relations with the countries either allied or closely aligned to the U.S. economically and culturally. The attention has diverted focus on economic programs such as tax cuts and higher fiscal spending markets want to know more about.

On Wednesday, the Federal Reserve held its fire on interest rates as widely expected on Wednesday, but was optimistic on the outlook for the economy in keeping its benchmark overnight lending rate target at 0.5% to 0.75% following a 25 basis point hike in December.

“Measures of consumer and business sentiment have improved of late,” the committee said in its statement, using new language that jibes with voices on Wall Street following the election of Donald Trump as president.

“Job gains remained solid and the unemployment rate stayed near its recent low,” the statement said, reflecting just a minor tweak from language at the December meeting.

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