FOREX-Dollar supported by upbeat U.S. data, jobs in focus

Fri Aug 2, 2013 12:10am EDT

Related Topics

* Dollar eases vs yen after previous day's 1.7 pct bounce

* U.S. factory activity accelerates, highest in two years

* Nonfarm payrolls the next hurdle for U.S. dollar

* Aussie dollar hits fresh 3-year low

By Masayuki Kitano

SINGAPORE, Aug 2 (Reuters) - The dollar eased versus the yen on Friday but held on to the bulk of gains made the previous day after better-than-expected U.S. data stirred hopes for an upbeat nonfarm payrolls report.

The dollar slipped 0.1 percent to 99.43 yen after having surged about 1.7 percent on Thursday, the greenback's biggest one-day percentage rise against the yen in about four months.

U.S. data on jobless claims and manufacturing that showed the world's largest economy was recovering steadily had fuelled Thursday's rally in the dollar.

Investors are now looking forward to nonfarm payrolls data, to be released later on Friday, with greater expectations that July will show a solid increase, which could increase the likelihood that the Federal Reserve will start scaling back its monetary stimulus later this year.

A Reuters survey of economists pointed to an increase of 184,000 in nonfarm payrolls. The jobless rate is seen dropping to 7.5 percent from 7.6 percent.

With expectations already running high, however, analysts said the dollar could slide if the jobs data were to disappoint.

"I think you have to be careful this time," said Daisuke Karakama, market economist for Mizuho Bank in Tokyo. "There was talk in the market yesterday that the number could be about 205,000 or 210,000, so I get the sense that these types of numbers have already been factored in."

The dollar index, which measures the greenback's value against a basket of currencies, held steady at 82.313, having bounced off a six-week low of 81.407 set on Wednesday.

Market positioning is probably tilted toward being long the dollar, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

"If we get a bad number the dollar might fall sharply," he said.

The euro inched up 0.1 percent to $1.3214, having retreated from a six-week high of $1.3345 set on Wednesday.

The outcomes of the European Central Bank and Bank of England rate reviews on Thursday offered no surprises, with both central banks leaving their benchmark rates unchanged at 0.5 percent.

The ECB said it will keep rates low for an extended period and could still cut if necessary, while the BoE left investors waiting for an expected announcement next week of a new strategy to get Britain's economy back in shape.

The Australian dollar, already on the back foot, dipped to a fresh three-year low of $0.8889 before recovering a bit to last stand at $0.8917. It was on track to end the week down around 3.8 percent.

Analysts in a Reuters poll conducted this week were unanimous in expecting a quarter point rate cut at Tuesday's Reserve Bank of Australia policy meeting.

Slower growth in China, Australia's top export market, a domestic economy that is growing below potential and a tame inflation outlook mean the RBA has room to lower its cash rate to a record low 2.5 percent.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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