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By Staff
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TOKYO, July 7 (Reuters) The euro steadied on Friday, keeping gains made after the European Central Bank signalled that it was prepared to step up the pace of interest rate rises and as traders counted down to vital U.S. jobs data due later in the session.

The single currency hovered in sight of a one-month high against the dollar after ECB President Jean-Claude Trichet said on Thursday that the central bank ''will exercise strong vigilance'' against inflationary pressures.

ECB hawkishness also kept the euro close to a record high against the yen as market expectations solidify that the central bank will raise rates in August.

The ECB kept rates unchanged at 2.75 percent as expected at its policy meeting on Thursday.

Currency moves were limited in Tokyo as traders grew cautious ahead of U.S. nonfarm payrolls figures due at 1230 GMT that could bolster the argument for more rate rises by the Federal Reserve.

Strong private sector jobs data on Wednesday prompted economists to revise higher their forecasts for the upcoming figures, boosting speculation that the Fed could continue its two-year monetary tightening cycle and lift rates from 5.25 percent next month.

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

''Given the revised forecasts and then the scepticism that the market may have overshot on its expectations, the dollar really could go either way on the jobs data,'' said Fumihiko Kawano, forex manager at Nomura Securities.

In early Tokyo 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 147.15 yen, not far from 147.42 yen, the record high hit on Thursday.

The dollar traded at 115.20 yen.

Reuters DH VP0706

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