FOREX-Dollar gains on upbeat U.S. private sector jobs data

Wed Jul 2, 2014 4:26pm EDT

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(Adds prices, comment, ECB outlook)

* ADP payrolls show strong gains

* Investors wary of verbal intervention from ECB's Draghi

* Sterling at six-year highs on upbeat data

By Gertrude Chavez-Dreyfuss

NEW YORK, July 2 (Reuters) - The dollar rose broadly on Wednesday after a report showed the economy created the most U.S. private sector jobs in 1-1/2 years last month.

The report boded well for Thursday's U.S. nonfarm payrolls report, and provided a boost to the dollar, which has struggled this year despite the Federal Reserve reducing its monthly asset purchases.

Private U.S. employers added 281,000 workers to payrolls in June, up from 179,000 in May, payrolls processor ADP said on Wednesday. June's gains, which topped economists' expectations for an increase of only 200,000, were the largest since November 2012.

"While the ADP report may not be a 'game-changer', it will leave recently established short-dollar positions somewhat exposed and we would expect it to provide the currency with some degree of support heading into Thursday's full employment report," said Bob Lynch, head of currency strategy at HSBC in New York.

A Reuters poll showed a U.S. non-farm payrolls forecast of 212,000 jobs.

"Any figure above 200,000 would likely be encouraging for the growth of the U.S. economy, but it also means the Federal Reserve would likely continue moving closer to, and perhaps even accelerate, the end of quantitative easing and an eventual interest rate hike," said Neal Gilbert, senior market analyst at FOREX.com in Grand Rapids, Michigan.

In late New York trading, the dollar index rose 0.2 percent to 79.956. Against the yen, the dollar was up 0.3 percent as well at 101.79 yen.

The euro, meanwhile, fell 0.2 percent to $1.3656.

Europe's common currency also lost steam on concern policy makers will intervene verbally to keep the currency from strengthening. It fell to a 1 1/2-year low against the British pound, which was again lifted by better-than-expected data.

The European Central Bank is scheduled to meet on Thursday to discuss interest rate policy. But after last month's barrage of policy changes, the ECB is unlikely to do much, analysts said.

Investors are still waiting for details of the new long-term lending program and ECB President Mario Draghi is bound to be asked at his news conference about whether he is ready to start quantitative easing.

Sterling earlier hit a six-year high against the dollar after forecast-busting UK construction data and more evidence of an upswing in the housing market. Both heightened expectations that the Bank of England will tighten policy before the year's end.

But the pound was last flat at $1.7153, weighed down by a strong U.S. private sector jobs report. (Additional reporting by Anirban Nag in London; Editing by James Dalgleish and Grant McCool)

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