By Gina Lee

Investing.com – The dollar was down on Friday morning in Asia but set for a fifth consecutive weekly gain on the Japanese yen. The latest U.S. job report could justify an early Federal Reserve interest-rate hike.

By 10:49 ET (03:49 GMT), the that monitors the greenback against other currencies had dropped 0.10% at 96.230 (3:49 GMT).

The pair inched up 0.05% to 115.88. released earlier in the day showed that household spending contracted 1.3% and 1.2% and in November, while the grew 0.5% year-on-year in December.

Both the pair edged higher by 0.13 to 0.7169, and the pair rose by 0.15 to 0.6755.

It fell by 0.1% to 6.3765 Investors expect that the Bank of England soon will begin increasing interest rates.

Although the dollar reached a 5-year high of 116.35 against the yen on Tuesday, it has since fallen slightly. The U.S. is currently up 0.7% against the Japanese yen and 2.7% for the past five weeks. This comes despite expectations that the Fed would increase interest rates multiple times by 2022. In March, a selloff in the bond markets and an increase in yields led to a fall in the yields.

Investors are betting the Bank of Japan won’t be as aggressive in raising interest rates, since the yen is among the biggest losers of major currencies. The US dollar is poised for its strongest week in over a month, against New Zealand and Australia.

James Bullard of St. Louis Fed said that the Fed might also reduce its balance sheets soon after they raise interest rates. Mary Daly, President of the San Francisco Fed, stated that the reduction in balance sheets would occur after normalizing rates.

Investors await now the U.S. employment report, particularly the figure, due to be released later today.

NatWest analysts wrote that if the number is very high, it gives the Fed more fuel to keep the hawkish rhetoric going, further supporting the probability of a March hike.