FX round-up: Greenback falls for fifth day, markets quiet ahead of North Korean founding day

Friday saw the dollar index drop to it's weakest level this month against a basket of currencies while markets brace for North Korean independence day.

The dollar index traded 0.36% lower to 91.335, marking it's lowest level since early 2015.

The drop came after FOMC member William Dudley spoke at New York university. Dudley is a voting member on the FOMC, so anything he says is likely to have some effect.

"The USD decline has gained momentum now after the Fed's Dudley did not state explicitly that there would be a hike this year but instead focused on gradual removal of accommodation," Morgan Stanley analysts said.

As a result, the USD fell against most major counterparts. EUR/USD was fairly flat at 1.2022 while cable was 0.63% up to 1.3184.

The single currency saw some profit taking against the dollar, just shy of 1.2100 on Friday, reeling from Thursday's surge.

A Reuters report that ECB policymakers were in broad agreement that their next step will be reducing their bond purchases and that they had discussed four options on how to go about it at their latest meeting were behind the euro's gains in the first half of the session. The ECB is due to decide next month on the future of its €2.3trn bond-buying programme, with sources telling Reuters a cut in the pace of buying is on the cards.

Against sterling, the euro traded 0.61% lower to 0.9121 and looks to be heading to support at 0.9100. Data out on Friday showed manufacturing production in the UK was up 0.5% month-on-month, beating analyst expectations of 0.3%.

Also on the agenda were employment change and unemployment rate figures from Canada that came in at 22,200 and 6.2%, both beating expectations.

The Canadian dollar has continued to strengthen against the greenback for the last two days since an interest rate increase from the Bank of Canada (BoC), but the short trade looks to be overcrowded as the pair traded 0.27% lower to 1.2148 despite the favourable figures.

USD/JPY continued to trade lower on the day as the wekening dollar weighed heavily on the pair. Down 0.58% to 107.84, the yen could also be benefiting from early positioning ahead of North Korea's independence day on Saturday 9 September, when the state was expected to conduct another misile test.