Dollar slips after rally on upbeat US jobs data

TOKYO, Nov 6 (Reuters) The dollar slipped on Monday after posting gains late last week on data showing solid U.S. jobs growth the past few months, reinforcing expectations for the Federal Reserve to keep interest rates steady for a while.

Upward revisions showed U.S. companies added a combined 470,000 jobs in the three months to October, well above previous estimates and catching off guard many investors expecting weak growth to prompt the Fed to cut rates early next year.

The unemployment rate also fell to a 5-1/2-year low of 4.4 percent while another report showed growth in the giant U.S.

service sector accelerating in October, also helping alleviate worries about the economy's health.

Currency strategists at BNP Paribas said the data ''moderated market hopes that the Fed will help the US economy glide into a soft landing with strategic rate cuts early in 2007''.

With the Fed likely to keep rates on hold at 5.25 percent, the dollar may maintain its yield advantage over the euro and the low-yielding yen.

The dollar slipped to 117.90 yen from near 118.00 yen in late New York trade on Friday when it jumped as high as 118.19 yen, rebounding from a one-month low of 116.57 yen hit last week.

The euro dipped to 149.95 yen from around 150.05 yen but stayed in sight of 150.80 yen struck in late October, the strongest since the single European currency was launched in 1999.

The euro was little changed at $1.2720.

A string of soft economic data in the past few weeks had driven the dollar to one-month lows against the euro and the yen, as well as a six-month trough versus the high-yielding Australian dollar.

Futures on the federal funds rate tumbled on Friday to show next to no chance of a rate cut by January after having priced in a 16 percent chance for such a move beforehand.

Market players will get a view on the Fed's thinking, with speeches from both Chicago Fed President Michael Moskow and Cleveland Fed President Sandra Pianalto on the economic outlook later in the session.

In Europe, economic reports include a variety of service sector indexes, German industrial orders in September and British industrial production for the same month.

Reuters SBA VP0602