Asian session: The dollar dropped to a two-week low against yen

The dollar dropped to a two-week low against its Japanese counterpart, though investors' caution ahead of the U.S. jobs report later in the session limited its losses.

Markets expect U.S. employment data due at 1230 GMT to show a non-farm payroll increase of about 164,000 and 0.2 percent rise in average wage earnings in May.

The data will be followed by a speech from Federal Reserve Chair Janet Yellen on Monday, the last chance for the Fed to communicate with markets before it begins a blackout period ahead of its policy meeting on June 14-15.

"If we see a job figure that is largely in line with market consensus and if Yellen maintains a positive tone on rate hikes, I think the chance of a rate hike in June is pretty high," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

Currently U.S. money market futures are pricing in only about 20 percent chance of a hike in June and 60 percent by July.

In recent weeks global markets have been puzzling over what the Fed will do in the near term as relatively upbeat U.S. data have been eclipsed by a still-sluggish global economy and worries over the risk of Britain exiting the European Union.

"Markets are pricing in smaller chances of a hike partly because of worries about 'Brexit'. That is also something that could influence the Fed," Ichikawa added.

The uncertain global backdrop was underlined by the European Central Bank, which on Thursday predicted consumer price growth would remain below target through 2018 as it struggles with cheap energy feeding into the price of other goods and services.

The ECB kept its negative rates unchanged, with President Mario Draghi saying stimulus from previously approved and yet to be implemented measures were expected to work its way through the system.

The euro was little changed at $1.115 on Friday, after sliding from this week's high of $1.1221 touched early on Thursday.

Against the yen, it last stood at 121.38 after falling to a three-year low of 121.065 yen in the previous session.

The yen held steady at 108.915 per dollar, after hitting a two-week high of 108.525 on Thursday, a move some market players attributed to disappointment over a lack of a clear plan on stimulus from Japanese Prime Minister Shinzo Abe. It is poised for a gain of 1.3 percent for the week.

The yen tends to strengthen when there is bad news on the economy because it is often used as a funding currency for investment in higher-yielding riskier assets.

EUR / USD: during the Asian session, the pair was trading in the $ 1.1145-50

GBP / USD: during the Asian session, the pair was trading in the $ 1.4405-10

USD / JPY: during the Asian session, the pair is trading in the range of $ 108.50-109.15

Based on Reuters materials