FOREX-Euro steady, scope for gains on U.S. jobs data

Fri Oct 5, 2012 4:02am EDT

Related Topics

* Euro supported as market awaits U.S. jobs data

* Better-than-forecast number could see euro rally

* Yen edges higher after BoJ keeps policy unchanged

By Nia Williams

LONDON, Oct 5 (Reuters) - The euro hovered near a two-week high versus the dollar on Friday after the European Central Bank reiterated it was ready to buy bonds to tackle the debt crisis, with further gains seen dependent on U.S. jobs data later in the session.

A better-than-expected U.S. non-farm payrolls number, released at 1230 GMT, could soothe concerns about the health of the world's largest economy and fan demand for perceived riskier currencies against the safe haven dollar.

A Reuters consensus forecast showed market players were expecting 113,000 jobs to be added.

"Today if we see a good U.S. number, say above 160,000, that would be bullish for risk and bearish for the dollar," said Daragh Maher, currency strategist at HSBC.

The euro was down 0.1 percent at $1.3003 but held within sight of Thursday's two-week peak of $1.3032. Strategists said there was resistance around $1.3172, the September high.

ECB President Mario Draghi said on Thursday that everything was in place for the central bank to buy the bonds of struggling euro zone countries like Spain and that conditions linked to it need not be punitive.

But Draghi, speaking after the ECB left interest rates unchanged at a record low 0.75 percent, offered no clues as to when Spain might make a formal aid request that would activate the programme.

Market players said traders seemed to be looking to sell the euro on rallies but were wary of doing so ahead of a Spanish aid request. If Spain asks for a bailout it would be likely to lift investor appetite to take on risk and boost the euro.

"People who want to go short are looking to do so after a Spanish request for aid triggers a rally in the euro," the trader said, referring to traders who are eager to put on trades against the single currency.

The euro has also been supported by investors buying it back against currencies such as sterling and the Australian dollar, traders said.

The euro eased 0.2 percent against the Australian dollar to A$1.2679 but remained close to a four-month high of A$1.2718 hit on Thursday.

BOJ STAYS ON HOLD

The yen briefly nudged higher after the Bank of Japan kept monetary policy unchanged and held off from additional easing measures. The reaction was limited, however, as Friday's decision was in line with expectations.

The dollar dipped to an intraday low of 78.27 yen following the BoJ's announcement, but later pared losses to trade at 78.38 yen, down 0.1 percent on the day.

Although the BOJ's decision to keep policy unchanged was expected, the yen rose as there had been a risk the central bank might surprise with more easing. Japanese officials have expressed concerns about the strength of the yen.

"The Bank of Japan didn't move too long ago, but I think since then, there's almost been an expectation that central banks are going to keep on pushing on the monetary levers," said Mitul Kotecha, head of global FX strategy for Credit Agricole in Hong Kong.

Traders said the dollar would probably find support from buyers at 78.00 yen, while the resistance came in at the 100-day moving average around 78.83 yen.

The euro dipped 0.2 percent against the yen to 101.91 , retreating from a two-week high of 102.27 hit earlier in the session. (Additional reporting by Masayuki Kitano/editing by Chris Pizzey, London MPG Desk, +44 (0)207 542-4441)

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