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Dollar capped ahead of ECB, jobs data

Written by: Staff

TOKYO, July 6 (Reuters) The dollar kept gains from the previous session but struggled to rise further on Thursday due to investor caution ahead of a European Central Bank policy meeting later in the day and U.S. jobs data the following session.

The ECB is widely expected to keep interest rates unchanged at its meeting, and traders said they were keeping a close eye on the post-meeting statement to see whether the central bank adopts a hawkish tone to set the stage for a rate increase at its next meeting in early August.

Expectations of a further U.S. rate hike rose after a report on private-sector employment on Wednesday showed strong growth, raising prospects of similar growth in Friday's monthly nonfarm payrolls data.

''Until the jobs data the dollar will remain supported, but depending on the figures it could face selling after the data is released,'' said Tatsuro Karitani, senior trader at Mizuho Corporate Bank.

''If the jobs data is in line with or below expectations, the dollar selling could accelerate given expectations for an ECB rate increase next month,'' he added.

Also next week, the Bank of Japan is widely expected to raise interest rates for the first time in six years, giving some support to the yen, traders said.

Selling of the yen on concerns about missile launches by North Korea could subside soon, helping to return market focus to interest rates, traders said.

By 0010 GMT, the dollar was at 115.57 yen a tad lower than 115.73 yen in late U.S. trade.

The euro was at .2730 compared with .2724, and slipping from a one-month high of .2840 on EBS hit on Wednesday.

The euro was at 147.10 yen still within sight of a record high of 147.38 yen hit on Wednesday.

The dollar rose against the euro and the yen on Wednesday after the monthly ADP National Employment Report showed that U.S.

private-sector employees added an estimated 368,000 jobs in June, prompting several U.S. investment banks to raise their forecasts for June's nonfarm payrolls reading.

The report raised expectations the Labor Department's monthly payrolls report due on Friday could also show similar strength, helping to build the case for the Federal Reserve to boost interest rates again in August, traders said.

The most recent Reuters survey showed 185,000 jobs were expected to be added in June, up from a previous forecast of 155,000.

Reuters DH VP0712

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