Dollar steadies ahead of US jobs report

Tokyo, Oct 5: The dollar steadied above a record low against the euro on Friday as investors braced for a crucial US September jobs report due later in the session.

The US currency had eased overnight as investors expected the payrolls data to keep the Federal Reserve on track to cut interest rates for the second time later this month.

Traders said a US jobs growth figure below the median expectation of 100,000 may reignite a dollar-selling trend triggered last month after the Fed slashed its interest rates by 50 basis points to 4.75 per cent.

But investors refrained from taking big positions while data earlier this week had suggested the labour market in September was resilient in the face of slumping housing sector and pointed a possible strong figure in the US jobs report.

''It is not so simple to forecast how the market will react to the jobs data today,'' said Minoru Shioiri, chief manager of FX trading at Mitsubishi UFJ Securities.

''A stronger-than-expected number could trim expectations of a further Fed rate cut and push the dollar higher. But if stocks react negatively and hurt risk appetite, the dollar could fall against the yen.'' The euro was little changed from late US trade on Thursday at $1.4135. It had recovered from losses made earlier in the previous session as the European Central Bank had kept its focus on inflation after leaving its interest rates unchanged at 4 per cent on Thursday.

On Monday, the euro hit a record high of $1.4283 on electronic trading platform EBS.

The dollar index, a gauge of the greenback's value against a basket of major currencies, edged down 0.1 percent at 78.406, but stayed above an all-time low around 77.660 hit earlier this week.

Against the yen, the dollar was nearly flat at 116.45 yen and the euro was steady at 164.60 yen. The ECB President Jean-Claude Trichet warned that euro zone growth could turn out worse than expected after the central bank kept interest rates steady.

But Trichet also said the central bank's policy stance had not changed to neutral, suggesting that the next action could be a rise in interest rates. The Bank of England also kept interest rates unchanged as widely expected at 5.75 percent on Thursday.

Reuters>