Dollar gets respite from pick up in U.S. manufacturing before jobs report

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A picture illustration shows U.S. 100-dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao

The dollar clung to small gains from overnight on Wednesday, edging back from near a five-month trough versus major peers, as a pick up in U.S. manufacturing kept bets alive for a quicker normalisation of Federal Reserve policy.

The dollar index , which measures the greenback against six rivals, hovered just below 90 after dipping to as low as 89.662 on Tuesday and approaching the lowest since Jan. 7 at 89.533.

Likewise, the euro traded at $1.2222 after pulling back from near a multi-month top overnight, when it climbed to $1.22545.

Investors were also watching out the trajectory of China’s recently bullish yuan. It was last at 6.3798 per dollar in offshore trading , after retreating from the three-year high of 6.3526 reached on Monday as policy makers took steps to cool its advance including raising banks’ FX reserve requirements.

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