The yen surged against the dollar and euro this morning after the Bank of Japan's Tankan survey gave the market a boost while the greenback lifted off the previous day's lows against European currencies set after a US interest rate rise.
The markets were well prepared for the Federal Reserve's quarter point hike on yesterday and were turning their focus to tomorrow's US employment data to see what that would spell for the Fed's promise of a "measured" pace of tightening.
By 8.05 a.m., the euro had shed 0.25 per cent from late yesterday's levels to $1.2143 after gaining one percent in the previous session after the Fed disappointed dollar bulls looking for it to show a more aggressive stance on future hikes.
The dollar was 0.75 per cent weaker on the day at 108.18 yen while the euro was faring worse, down one percent at 131.41 yen.
The European Central Bank meets to decide on monetary policy today but is not expected to raise euro zone rates as it faces mixed signals about the pace of recovery in the region. It holds a news conference at 12.30 p.m.
A survey of euro zone manufacturers showed growth in the region slowed in June because export demand was not strong enough to make up for lacklustre spending by domestic consumers.