FOREX-Dollar steady after March U.S. private payrolls data

Wed Apr 2, 2014 9:57am EDT

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By Michael Connor

NEW YORK, April 2 (Reuters) - The dollar was little changed against a basket of major currencies on Wednesday after private payrolls data showed U.S. businesses shaking off some of the chill on hiring left by harsh winter weather.

The U.S. dollar index was flat at 80.09, with the dollar unchanged against the yen at 103.61 after trading as low as 103.59 yen shortly after the ADP National Employment Report for March came in slightly below forecasts.

Employers added 191,000 workers last month, while gains for February were revised upward, according to the report.

March U.S. nonfarm payrolls are scheduled for release by the federal government on Friday. Some currency traders say a strong showing will fuel a rally in the greenback.

"Everyone's still waiting for the actual jobs numbers on Friday, and that's limiting the movement of the dollar," said Nick Bennenbrock, currency strategist at Wells Fargo Securities in New York. "It's muted."

Major currency pairs have all been stuck in tight ranges since mid-February, with bets for a run higher by the dollar having been thwarted by a combination of nerves over economic slowdown in China and some worse than expected U.S. data.

That has begun to turn around in the past couple of weeks and dealers are beginning to speculate the nonfarm payrolls numbers on Friday may have the potential to turn the dollar sharply higher.

The heart of that argument is the assumption that, should the numbers begin to look more robust, U.S. interest rates will be raised early next year, while those in Europe and Japan will stay flat or be suppressed further.

"When we had that signal from (U.S. Federal Reserve Chair) Janet Yellen that rates could rise early next year, the line for many was that they wanted more confirmation before really betting on it," said a dealer at one large U.S. bank in London.

The euro was off 0.11 percent against the dollar at $1.3777 but is looking more robust than it did a week ago, when it was struck by hints that the Bundesbank's resistance to outright money-printing by the European Central Bank may be fading.

Several ECB officials have since emphasised the temporary nature of current low inflation - 0.5 percent in March - and that has supported expectations the bank will do nothing when it ends its monthly policy meeting on Thursday. (Additional Reporting By Patrick Graham in London; Editing by Peter Galloway)

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