Kuwait Reduces Oil Production under OPEC Cut Agreement

1

Gulf OPEC member Kuwait has reduced oil production in January to around 2.707 million barrels per day, meeting its output target under an OPEC supply cut agreement, a Kuwaiti oil official said on Friday.

It joins Saudi Arabia, the world’s top oil exporter and biggest OPEC producer, which also cut production this month by at least 486,000 bpd to its 10.058 million bpd target, according to a Gulf source familiar with Saudi oil policy, meaning it fully implemented OPEC’s agreement to reduce output.

The Organization of the Petroleum Exporting Countries in November agreed to implement output reductions this year as part of a global pact to limit supplies to support prices.

A committee responsible for monitoring compliance with the global oil production cut agreement will meet in Vienna on Jan. 21-22, although an industry source told Reuters on Friday that it would mainly discuss the mechanism to monitor compliance since no solid production data is available yet.

Under the OPEC deal, Kuwait agreed to reduce output by 131,000 bpd starting Jan. 1, from its October baseline production of 2.838 million bpd.

via Reuters.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

 JAMES GILLINGHAM
Advertisements

Dollar Volatility Balloons to Start the Year, Risk Trends Next?

Talking Points:

• The Dollar’s first week of 2017 has proven very volatile with a dramatic swing capped with an NFP-promoted rally

• Risk trends have extended their climb but the Dow’s failure to top 20,000 defines the troubled progression

• Speculative waves are growing larger from scheduled event risk to key themes to unscheduled headlines

See what live coverage is scheduled to cover key event risk for the FX and capital markets on the DailyFX Webinar Calendar.

Depending on what markets and benchmarks you track, the opening week of the new year either looked like a consistent but measured status quo or a dramatic shot of volatility. From the world’s most liquid currency – the Dollar – what started out as defused effort to break to fresh 14 year highs turned into a near 2.5 percent tumble. Yet, the bearish reversal that this could have turned into was halted by a December US labor report that would keep the embers of hawkish 2017 rate speculation glowing. As the world’s most liquid currency, the heavy waves the Greenback generated were felt from EUR/USD to USD/JPY to even further removed crosses. The CBOE’s volatility index for EUR/USD reflects the tumultuous conditions. The question is what next salvo spreads or dramatically amplifies the anxiety.

In contrast to the FX majors, the traditional risk-leaning standards seemed to have readily returned to the complacency that capped conviction before the holiday’s drained liquidity into the end of 2016. The S&P 500 spot index may have marked a new record high through the week’s close, but there was little drive behind the technical advance. A good proxy for the sentiment directing these markets is the Dow Jones Industrial Average. The long-popular equity index has held tantilizing close to the round 20,000 while defiantly refusing to finally break the spell it seems to hold over market participants. Keeping this ill-earned optimism growing looks increasingly dubious as uneven economic data competes with anti-trade and anti-cooperation for top financial headlines.

Looking ahead to the coming week, liquidity will further fill out as we dive further into 2017. However, that doesn’t ensure a clear sense of conviction amongst the trading ranks. There is plenty of data on the docket including key global trade figures, inflation pressures and the important University of Michigan consumer sentiment survey. These updates will tap well-defined fundamental themes like US rate forecasts. Such themes will represent influence on a grander scale. Both the disparity betwen the Fed’s forecasts to the market’s own views of where rates will be in a year’s time and the asymmetry in risk trends potential are two deeply rooted driver. Then there are the surprise developments that may prove the greatest threat to the fragile calm the market has attempted to keep for months. Policy tweets from the incoming US President and clear evidence of FX intervention for countries like China are dynamics that could easily drive fear. We discuss the unease to start the new trading year in this weekend Trading Video.

 

Forex Strategy Video: Chinese Yuan and Mexican Peso Open 2017 to Currency Wars

Talking Points:

• International efforts to engender economic advantage to others’ detriment are growing in prominence and frequency

• What used to be competitive monetary policy events are evolving more decisively into outright currency wars

• In the opening week of 2017, a strong Dollar drive prompted brazen intervention efforts on the Chinese Yuan and Mexican Peso

See what live coverage is scheduled to cover key event risk for the FX and capital markets on the DailyFX Webinar Calendar.

‘Currency wars’ is a strong description to use for the state of the markets, but it is increasingly appropriate given the developments in the global financial markets over the past days, weeks and months. Looking into previous years, we have seen efforts employed by countries that could have been more equitably labeled ‘competitive’. The Swiss National Bank’s effort to curb the overpowering influence of the Euro with the implimentation of a 1.2000 floor (which failed in spectacular fashion) was a clear but tolerated move. In direct intervention on behalf of the Yen by Japanese policy officials as recently as 2011, trade partners made grumbled but didn’t call the country out as they were limited efforts. And, there was China’s long-standing control over its exchange rate which drew claims of currency manipulator but not much in the way of policy response.

Heading into 2017, we have seen the rise of protectionism and the fall of cooperativism. The blame of middling growth amid massive stimulus efforts has been placed at the feet of trade partners. What’s more, these accusations are coming with increasingly bolder action. Among the most remarkable turns of wind arises from the US with the vows made by President-elect Donald Trump. Looking to act on percieved injustices to the US in global trade, the unorthodox policymaker has generated worry from investors and hits global counterparts. The Dollar’s volatility is a clear barometer for the market’s anxiety. But, perhaps the more exceptional response to the escalating US position is the blatant response to pressure of late by key global players.

Two of the more blatant moves to start 2017 were direct intervention efforts by China and Mexico. While these are not officially verified efforts, the communciation to the market was not veiled. A frequent target in US Presidential campaign, the Mexican Peso slide to a fresh record low (USD/MXN high) this past week before rumor spread through the market that the Mexican central bank was acting to shore up its currency with as much as $1 billion. The effort offered relatively little relief. In contrast, a massive 2.9 percent drop for USD/CNY – centered on the biggest two-day drop in the Chinese rate since 2005 – came with little word of effort or outlet. There is much debate over what side has prompted these more overt interludes into the market. Yet, as traders, we should concern ourselves with the ultimate results for conditions. Trading in a world of more explicit currency wars is the focus of this weekend Strategy Video.

 

Forex Market Outlook For The Week January 9 – 13, 2017

In the first week of 2017, the USD moved up and down in the midst of good as well as bad news. While America’s monthly employment report for December revealed a lower-than-expected job growth, wages rose 2.9 percent on an annualized basis. Further, the economy added only 156,000 positions against the expectation that it would increase by 175,000 and the unemployment rate rose slightly to 4.7 percent from 4.6 percent. The most significant aspect of the December report was the 10 cents growth in average hourly wages to $26, the highest gain since 2009. This indicated the complete recovery of the US labor market. The final report for the year 2016 also comes during a time when the US is on the brink of a presidential change. On his part, the new president Donald Trump has indicated aggressive fiscal measures, which includes higher domestic spending and tax cuts, in order to boost economic growth. The coming week will see the release of the US retail sales, PPI and consumer sentiment data. In general, the market movers for the coming week are as follows:

#1: Australia Retail Sales (01/10/2017 Tuesday 00:30 GMT)

1

In Australia, the increase in retail sales on moth-on-month basis was 0.5 percent in October 2016 compared to the 0.6 percent growth in September. Retail sales has grown for the third month in a row. Further, the reading for October was above the market estimates for a 0.3 percent increase. Forecast for November is an increase of 0.4 percent.

#2: China CPI (01/10/2017 Tuesday 1:30 GMT)

In November 2016, China’s Consumer Price Index or CPI, the main inflation gauge, rose 2.3 percent on year-over-year basis, according to the National Bureau of Statistics, up from the 2.1 percent increase recorded in the previous month. On a monthly basis, the CPI increased 0.1 percent in November. The inflation was driven by higher fuel and food prices. It is expected that the CPI will increase by 2.2 percent in the month of December.

#3: UK Manufacturing Production (01/11/2017 Wednesday 9:30 GMT)

On a month-on-month basis, manufacturing production in the UK declined 0.9 percent in October after registering a 0.6 percent increase in September. The reading for the month came in below the market expectations that manufacturing production will increase by 0.2 percent. The decline in factory output in October 2016 was the biggest since February last year. Forecast for November is that manufacturing production will increase by 0.6 percent.

#4: US Crude Oil Inventories (01/11/2017 Wednesday 15:30 GMT)

In the U.S., crude oil stocks dropped sharply towards the end of 2016. The stocks declined by 7 million barrels. However, the stocks of gasoline and distillates jumped as refineries increased production to bring down crude inventories and avoid higher taxes. Crude oil prices rose as Saudi Arabia agreed to OPEC’s request to cut down output after prices declined on US data.

#5: US Unemployment Claims (01/12/2017 Thursday 13:30 GMT)

The number of American people filing claims for jobless benefits dropped last week to nearly a 43-year low. This once again confirmed the continuous improvement being witnessed by the US labor market. The number of jobless claims declined by 28,000, on a seasonally adjusted basis, to 235,000 for the week that ended on December 31, 2016. The weekly jobless claims numbers have remained below the threshold 300,000 mark for 96 weeks in a row. Analysts had expected the jobless claims for the week to come in at 262,000. For the next reporting period, it is expected that the jobless claims will be 266,000.

#6: Federal Reserve Chair Janet Yellen Speaks (01/13/2017 Friday 00:00 GMT)

Federal Reserve Chairperson Janet Yellen is scheduled to speak at the Washington town hall meeting and answer audience questions. The markets are seen to remain volatile during her speeches. This is because traders look out for clues on the direction of interest rates in the future.

#7: China Trade Balance (01/13/2017 Friday 2:00 GMT)

In yuan terms, China’s foreign trade surged in November because of strong domestic and external demand in the short term. Exports increased by 5.9 percent on year over year basis in November, beating market expectations that exports will drop by 1 percent. Imports picked up steam and jumped 13 percent against market expectations for an increase of 5.6 percent. The trade surplus narrowed in November to 298 billion yuan. the nation’s trading value was 2.35 trillion yuan. Forecast for December is that the trade surplus will increase to 345 billion yuan.

#8: US Retail Sales/Core Retail Sales (01/13/2017 Friday 13:30 GMT)

Retail sales in the U.S. expanded in November, but it was less what the analysts had expected. Retail sales remained strong in September and October. In November, retail sales increased just 0.1 percent after increasing 0.6 percent in October. Economists had expected an increase of 0.3 percent. Consumer spending rose amid continued solid gains jobs market and rising wages. This in turn raised consumer’s optimism as regards their finances. Core retail sales, which excludes automobiles and service stations, increased 0.2 percent against analysts’ expectation for an increase of 0.4 percent. Forecast for December is an increase 0.5 percent in both retail sales and core retail sales.

#9: US PPI (01/13/2017 Friday 13:30 GMT)

In the U.S., the producer prices jumped in November because of rising services costs. This is a clear indication that inflationary pressures are on the rise. Finished goods prices rose by 0.4 percent, registering the largest gain since June. Finished goods prices remained flat in October. During the 12 months to October, the PPI has gained 1.3 percent, the biggest rise since November 2014. Forecast for December is that PPI will increase by 0.1 percent.

#10: US UoM Consumer Sentiment (01/13/2017 Friday 15:00 GMT)

The survey carried out by University of Michigan in December showed that consumer’s climate reached the highest level since January 2015. The UoM Consumer Sentiment Index rose to 98 points from 93.8 points in November 2016. Economists had expected the index to increase to 94.3. The surge was attributed to Trump’s surprise victory as the new economic policies planned by the president elect raised consumers’ hopes.

FOREX-Dollar moves away from 3-week low, caution before US jobs limits rebound

* USD trims losses as dust begins to settle after overnight plunge

* Caution towards yuan, US jobs report limits dollar bounce

* Dollar index on track to end the week down about 0.8 pct

* Aussie gets mild support from upbeat trade data, near 3-wk high (Updates throughout)

By Shinichi Saoshiro

TOKYO, Jan 6 The dollar crawled up on Friday as the dust settled from its tumble overnight to a three-week low, although gains were limited ahead of the U.S. non-farm payrolls due out later in the session.

The dollar index against a basket of major currencies was up 0.1 percent at 101.610 after dropping overnight to as low as 101.300, its lowest since Dec. 14. It was on track to lose about 0.8 percent on the week.

The index, which had set a 14-year high of 103.820 just three days ago on a seeming resumption of the dollar-bullish ‘Trump trade’, was weakened overnight by lacklustre U.S. employment data. The U.S. currency was also hit by a surge in the Chinese yuan, which some traders suspect was orchestrated by China to shake out large short positions against the currency.

As China works to stem capital flows and stabilise the currency ahead of the Lunar New Year and Donald Trump’s inauguration as U.S. president, the offshore yuan rose the previous day to a two-month high against the dollar to mark the largest two-day rise since its inception in 2010.

“The yuan was a key catalyst that bears watching but it is not the only factor. There were large amounts of dollar long positions, particularly against the euro and yen, that found an opportunity to be unwound,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

Chinese authorities on Friday ramped up their defense of its currency, with the central bank raising the value of it official guidance rate by the most since the yuan was revalued in 2005.

The move was reminiscent of January 2016, when China’s central bank reversed an earlier depreciation of the yuan -which sent global markets tumbling- and led the currency higher.

“The global economy looks to be in better shape compared to a year ago so the risk-off trend could be limited. But China-related headlines appear to have given participants a chance to adjust positions which had excessively favoured the dollar,” said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.

China is expected to report December and full-year 2016 foreign exchange reserves on Saturday amid concern over the speed at which it is burning through its dollar cash pile in defence of the yuan.

The greenback was up 0.4 percent at 115.825 yen after falling 1.6 percent overnight. It ranged between a high of 118.605 and a low of 115.060 this week.

The euro was down 0.2 percent at $1.0584 after rallying 1.3 percent the previous day to pull away from a 14-year trough of $1.0340 set on Tuesday.

The dollar has lost support from U.S. Treasury yields, which has pulled back sharply over the past three days from their highest levels since September 2014 marked in December. Yields pulled back as investors grew risk-averse amid uncertainty about the incoming Trump administration.

Treasury yields declined further on Thursday as the ADP National Employment Report showed that U.S. private employers added 153,000 jobs last month, below economists’ expectations for a gain of 170,000.

Investors are now focused on Friday’s U.S. non-farm payrolls report. While economists expected jobs gains of 178,000 in December, wages were also in sharp focus as they were seen as a key factor determining the Fed’s pace of rate hikes this year.

The Australian dollar nudged down 0.2 percent to $0.7327 after gaining 0.7 percent overnight, when it touched a three-week high of $0.7356. The Aussie received some support earlier on Friday after data showed Australia boasting its first trade surplus in almost three years in November.

The New Zealand dollar inched down 0.1 percent to $0.7017 after climbing to a three-week peak of $0.7040. (Reporting by Shinichi Saoshiro; Editing by Kim Coghill and Randy Fabi)

 

Forex Weekly Outlook January 9-13

The US dollar wobbled in the wake of 2017, torn between good and bad news. US Retail sales, consumer sentiment and PPI stand out. These are the highlights for this week. Join us as we explore the market movers on forex calendar.

The US monthly employment report showed a lower than expected job growth in December but wages registered a 2.9% annualized gain. The economy added 156,000 positions while expected to increase 175,000. The unemployment rate edged to 4.7% from 4.6%. However, wage growth was the most significant factor in December’s report as average hourly wages jumped 10 cents to $26, the highest gain since 2009, indicating the US labor market has fully recovered. The final report of 2016 also comes amidst a presidential transition period. Donald Trump has promised aggressive fiscal measures including tax cuts and higher domestic spending to boost economic growth beyond the mild expansion witnessed so far. Let’s start:

  1. US Crude Oil Inventories: Wednesday, 15:30. U.S. crude stocks contracted sharply at the end the year, showing a draw of 7 million barrels, but stocks of gasoline and distillates surged as refineries expedited production to reduce crude inventories in order to avoid higher taxes. Oil prices increased as Saudi Arabia consented to OPEC’s plea to reduce output after prices fell on Us data.
  2. US Unemployment Claims: Thursday, 13:30. The number of Americans filing new claims for unemployment benefits declined last week to near a 43 year low, confirming yet again the continuous improvement in the labor market. Claims declined 28,000 to a seasonally adjusted 235,000 for the week ended Dec. 31. The four-week moving average of claims declined 5,750 reaching 256,750. The number of weekly unemployment claims have remained below the 300,000 threshold associated with a healthy labor market, for 96 consecutive weeks. Economists expected a higher reading of 262,000.
  3. US Retail sales: Friday, 13:30. U.S. retail sales expanded less than forecast in November, following strong gains in the previous two months. Sales increased 0.1% after rising 0.6% in October. Economists expected a 0.3% gain. Consumer spending strengthened recently amid continued solid job gains as well as rising wages, raising consumer’s optimism about their finances. Meanwhile, core sales, excluding automobiles and service stations increased 0.2%, while anticipated to rise 0.4%.
  4. US PPI: Friday, 13:30. U.S. producer prices soared in November amid rising costs for services, indicating inflation pressures are steadily rising. Prices of finished goods increased 0.4% registering their largest gain since June, after a flat reading in October. In the 12 months through October, the PPI gained 1.3%, the biggest increase since November 2014. Producer prices have rebounded from last year’s plunge in oil prices and are expected to offset deflationary effects from the dollar’s renewed strength.
  5. US UoM Consumer Sentiment: Friday, 15:00. University of Michigan’s December survey showed consumer’s climate hit the highest level since January 2015. The Index of Consumer Sentiment reached 98 points compared to 93.8 in November. Economists expected a milder rise to 94.3. The surge was mainly due to Trump’s surprise victory. Consumers expressed high hopes from the new economic policies planned by the newly elected president.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT.

Second Wind for Dollar Before Jobs Undercuts Bonds: Markets Wrap

  • Yen, euro, pound fall first day in three as labor gains seen
  • Biggest post-Brexit rally in U.S. bonds is brought up short

The dollar rebounded as Treasuries fell before U.S. data expected to show sustained growth in hiring. Global stocks headed for the best start to the year since 2013.

As the greenback stabilized Friday after a two-day tumble, the yen, euro and British pound all weakened and the Turkish lira extended losses. China’s offshore yuan pared a record weekly rally triggered by government curbs while a second intervention by Mexico’s central bank sent the peso to the top of the stack among major currencies. Oil declined and Treasuries snapped their biggest post-Brexit rally.

1

Evidence of a healthy U.S. labor market could deliver a second wind to a flagging dollar hit by doubts that Donald Trump will usher in an era of fiscal easing and rapid growth. The employment report is expected to confirm a sixth straight year with more than 2 million jobs added, which may help to stem the steepest losses on a Bloomberg gauge of 10 major currencies this week. Options signal the dollar is poised for further gains against the euro.

“Provided it’s an OK payrolls figure, we’re looking at dollar bulls reasserting themselves possibly as early as next week,” said Neil Mellor, a London-based currency strategist at Bank of New York Mellon Corp. “Positions are still skewed toward dollar strength.”

Read more from our Markets Live blog here.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2 percent by 7:34 a.m. in New York after falling 1 percent Thursday.
  • The offshore yuan fell 0.6 percent to 6.8304 per dollar after a four-day climb.
  • The euro dropped 0.3 percent to $1.0578 and the pound retreated 0.5 percent to $1.2354.
  • Turkey’s lira was down 0.8 percent after touching a record low Thursday.

Stocks

  • Global stocks are poised to post the best start to a year since 2013, with the MSCI All-Country World Index up 1.7 percent this week.
  • The Stoxx Europe 600 Index fell 0.2 percent, trimming a weekly advance, as commodity producers declined. S&P 500 futures were little changed
  • Sanofi slipped 2.8 percent after Amgen Inc. won a court ruling blocking the French drugmaker and its partner from selling a cholestrol-lowering medicine in the U.S.

Commodities

  • The Bloomberg Commodity Index, which measures returns on raw materials, fell 0.1 percent as metals declined on a stronger dollar.
  • Gold retreated 0.3 percent to $1,176.20 per ounce after a three-day, 2.9 percent climb.
  • Crude futures were up 0.7 percent to $57.31 a barrel in New York after U.S. inventories fell by 7.05 million barrels last week, a government report showed.

Bonds

  • The biggest rally in U.S. Treasuries since June 27 was brought up short, with the yield on the 10-year benchmark up one basis point to 2.355 percent after sliding nine basis points Thursday.

FOREX-Dollar falls after unimpressive U.S. labor data, yuan surge

* U.S. unemployment data mixed, fails to stop dollar’s move lower

* Offshore yuan on pace for largest 2-day rise since launch

* Dollar falls vs yen, euro

* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh (Updates to U.S. market open, adds quote, data, changes dateline; previous LONDON)

By Dion Rabouin

NEW YORK, Jan 5 The dollar lost ground against the yen and euro on Thursday after U.S. unemployment data failed to reverse a downtrend that followed some of the biggest gains on record for China’s yuan.

A rise in overnight borrowing costs in Hong Kong and growth in China’s services sector to a 17-month high last month helped put the yuan on pace for the biggest two-day rise for the offshore version of its currency since its inception in 2010.

That in turn triggered a broader round of profit-taking on the dollar, sending it more than 1 percent lower against the yen and as low as $1.0575 per euro before a late-morning recovery in Europe.

U.S. jobless claims fell to a 43-year low last week, but that data was countered by a soft report from payrolls processor ADP showing employment gains were muted in December.

That put the dollar back on its lower trajectory after a brief stall following the release of the jobless claims figure.

“All we’re seeing is a continuation of the overnight move, which is dollar weakness,” said Chapdelaine Foreign Exchange Managing Director Douglas Borthwick. “Obviously that’s also helped by the significant intervention by the Chinese overnight in terms of where they’re moving their overnight rates, pushing dollar/yuan lower and a lower dollar/yuan means a lower dollar globally.”

Borthwick also said sentiment was growing among investors that the dollar’s strength has peaked as many return to markets after the Christmas and New Year holidays.

The dollar was 1 percent lower against the yen, falling to 116.09 yen and edging toward its overnight low of 115.58 yen, which was the lowest since Dec. 14.

The euro rose 0.5 percent against the dollar to $1.0533, tracking toward its overnight high of $1.0575, the highest since it peaked at nearly $1.07 on Dec. 30.

The dollar index, a measure of the greenback against six world currencies, fell 0.6 percent to 102.320.

FOREX-Dollar moves away from 3-week low, caution before US jobs limits rebound

* USD trims losses as dust begins to settle after overnight plunge

* Caution towards yuan, US jobs report limits dollar bounce

* Dollar index on track to end the week down about 0.8 pct

* Aussie gets mild support from upbeat trade data, near 3-wk high (Updates throughout)

By Shinichi Saoshiro

TOKYO, Jan 6 (Reuters) – The dollar crawled up on Friday as the dust settled from its tumble overnight to a three-week low, although gains were limited ahead of the U.S. non-farm payrolls due out later in the session.

The dollar index against a basket of major currencies was up 0.1 percent at 101.610 after dropping overnight to as low as 101.300, its lowest since Dec. 14. It was on track to lose about 0.8 percent on the week.

The index, which had set a 14-year high of 103.820 just three days ago on a seeming resumption of the dollar-bullish ‘Trump trade’, was weakened overnight by lacklustre U.S. employment data. The U.S. currency was also hit by a surge in the Chinese yuan, which some traders suspect was orchestrated by China to shake out large short positions against the currency.

As China works to stem capital flows and stabilise the currency ahead of the Lunar New Year and Donald Trump’s inauguration as U.S. president, the offshore yuan rose the previous day to a two-month high against the dollar to mark the largest two-day rise since its inception in 2010.

“The yuan was a key catalyst that bears watching but it is not the only factor. There were large amounts of dollar long positions, particularly against the euro and yen, that found an opportunity to be unwound,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

Chinese authorities on Friday ramped up their defense of its currency, with the central bank raising the value of it official guidance rate by the most since the yuan was revalued in 2005.

The move was reminiscent of January 2016, when China’s central bank reversed an earlier depreciation of the yuan -which sent global markets tumbling- and led the currency higher.

“The global economy looks to be in better shape compared to a year ago so the risk-off trend could be limited. But China-related headlines appear to have given participants a chance to adjust positions which had excessively favoured the dollar,” said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.

China is expected to report December and full-year 2016 foreign exchange reserves on Saturday amid concern over the speed at which it is burning through its dollar cash pile in defence of the yuan.

The greenback was up 0.4 percent at 115.825 yen after falling 1.6 percent overnight. It ranged between a high of 118.605 and a low of 115.060 this week.

The euro was down 0.2 percent at $1.0584 after rallying 1.3 percent the previous day to pull away from a 14-year trough of $1.0340 set on Tuesday.

The dollar has lost support from U.S. Treasury yields, which has pulled back sharply over the past three days from their highest levels since September 2014 marked in December. Yields pulled back as investors grew risk-averse amid uncertainty about the incoming Trump administration.

Treasury yields declined further on Thursday as the ADP National Employment Report showed that U.S. private employers added 153,000 jobs last month, below economists’ expectations for a gain of 170,000.

Investors are now focused on Friday’s U.S. non-farm payrolls report. While economists expected jobs gains of 178,000 in December, wages were also in sharp focus as they were seen as a key factor determining the Fed’s pace of rate hikes this year.

The Australian dollar nudged down 0.2 percent to $0.7327 after gaining 0.7 percent overnight, when it touched a three-week high of $0.7356. The Aussie received some support earlier on Friday after data showed Australia boasting its first trade surplus in almost three years in November.

The New Zealand dollar inched down 0.1 percent to $0.7017 after climbing to a three-week peak of $0.7040.

FOREX-Dollar rises before jobs data, yuan steadies

LONDON, Jan 6 (Reuters) – The dollar clawed back ground on Friday but was heading for a second straight weekly loss, having tumbled the previous day on a rare piece of poor U.S. data and apparent action by Chinese authorities to shore up the yuan.

Most currencies were range trading ahead of U.S. non-farm payrolls due later in the session, but the dollar was 0.7 percent higher against the yen at 116.10 and nudged the euro down to $1.0590 by 0915 GMT.

Sterling was treading water ahead of a decision expected over the next week on the role of parliament in soon-to-start Brexit negotiations, while Mexico’s peso steadied having surged after currency intervention on Thursday.

“It’s a bit quieter following the moves yesterday and going into the payrolls it will take a fairly strong print especially on the earnings side to reinvigorate the stalled dollar rally,” said Credit Agricole head of G10 FX strategy Valentin Marinov.

“My hunch is that investors are just waiting for the Trump inauguration.”

The dollar index, which measures the greenback against six of the world’s top currencies, was at 101.62 having set a 14-year high of 103.820 three days ago on a seeming resumption of the dollar-bullish ‘Trump trade’.

But it crumpled on Thursday following lacklustre U.S. employment data, having already been buffeted by a surge in the Chinese yuan as Beijing made moves to shake out large bets against the currency.

There was more action overnight as borrowing rates for the offshore yuan or CNH leaped to 61 percent, their highest in a year, and the CNH headed for its biggest weekly gains since it was introduced in 2010 as China’s latest attempts to squeeze speculators bore fruit.

All eyes on Friday were on non-farm payrolls, expected to have increased by 178,000 jobs last month after a similar rise in November, according to a Reuters survey of economists.

The U.S. unemployment rate, though, is forecast to tick up to 4.7 percent from a nine-year low of 4.6 percent in November.

“The global economy looks to be in better shape compared to a year ago so the (current) risk-off trend could be limited,” said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.

“But China-related headlines appear to have given participants a chance to adjust positions which had excessively favoured the dollar.”

The Australian dollar nudged down 0.2 percent to $0.7327 after gaining 0.7 percent overnight, when it touched a three-week high of $0.7356. It received some support as data showed Australia posted its first trade surplus in almost three years in November.

The New Zealand dollar followed, inching down 0.1 percent to $0.7017 after climbing to a three-week peak of $0.7040.