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Written by: Staff

TOKYO, July 7 (Reuters) The dollar hardly budged in quiet trading on Friday as traders counted down to vital U.S. jobs data due later in the session that could bolster the argument for more rate rises by the Federal Reserve.

The euro held on to gains made after the European Central Bank on Thursday signalled that it was prepared to step up the pace of interest rate rises, keeping the currency in sight of a one-month peak against the dollar and a record high versus the yen.

Currency moves were stymied as traders grew cautious ahead of U.S. nonfarm payrolls figures due at 1230 GMT.

Strong private sector jobs data earlier in the week had prompted some dollar buying as economists scrambled to revise up their forecasts for the upcoming payroll figures.

Economists expect the data to show 185,000 workers were added in June, up from expectations for around 155,000 before the private sector jobs data landed.

''The dollar has already been bought on expectations for a strong reading, so a figure over 200,000 will be needed to spur more gains,'' said Hideaki Furumaya, forex manager at Trust and Custody Services.

By 0240 GMT, the dollar was at 115.15 yen, barely moving from levels in late U.S. trade.

The euro was little changed at $1.2775 after climbing as high as $1.2784 on Thursday. It hit a one-month high of $1.2840 on trading platform EBS earlier in the week.

The euro was also nearly flat at 147.10 yen, not far from 147.42 yen, the record high hit on Thursday.

Strong U.S. employment data could boost speculation that the Fed will continue its two-year monetary tightening cycle and lift rates from 5.25 percent at its next meeting in August.

''At its last meeting, the Fed said that more rate rises would depend on economic data, so figures for jobs and consumer prices are a big focus,'' said Fumihiko Kawano, forex manager at Nomura Securities.

ECB SUPPORTS EURO After the ECB kept rates unchanged at 2.75 percent as expected on Thursday, President Jean-Claude Trichet pledged that the central bank ''will exercise strong vigilance'' against inflationary pressures, solidifying expectations it will raise rates in August.

Trichet also said that the central bank would break with tradition by holding its early August meeting in person, rather than via teleconference, suggesting that a rate rise at that meeting is possible.

The ECB holds two policy meetings next month.

Interest rates remain the main driver of currency moves, and analysts said that the euro would continue to be supported in the mid-term given expectations the ECB will lift rates at least twice before the end of the year.

Meanwhile, the Bank of Japan is widely expected to raise rates from zero -- which would be the first such rise in six years -- when it meets next week.

Anticipation for a rate rise has heightened since the central bank's quarterly tankan survey of corporate sentiment released at the start of the week showed that business conditions improved in the three months to June and were set to get better by September.

But one rate rise will do little to cut the rate advantage that currencies of other nations have over the yen, and some traders said that yen gains on a rate rise could be limited.

''The yen didn't move very much on the tankan, so we're not expecting a big rise if there is a rate rise next week,'' said Furumaya at Trust and Custody Services.


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