* Yen extends broad slide, focus shifts to data
* Euro lower against the dollar ahead of ECB meeting
* ADP report shows U.S. jobs gain of 139,000
* U.S. services sector at 4-year low
By Gertrude Chavez-Dreyfuss
NEW YORK, March 5 The dollar edged higher
against the euro and yen on Wednesday, shrugging off
softer-than-expected U.S. private-sector payrolls and services
sector reports affected by severe winter conditions.
Recent weakness in U.S. economic data is not expected to
deter the Federal Reserve from gradually reducing its asset
purchase, a scenario that is positive for the dollar.
U.S. private employers added 139,000 jobs in February, lower
than market expectations, while services sector growth hit a
four-year low of 51.6.
And there is a growing view that given the weaker-than
forecast ADP National Employment report, Friday's U.S. non-farm
payrolls number could likewise disappoint. Economists polled by
Reuters expect U.S. job gains of 150,000 last month.
Still many expect the dollar to hold up well.
"The winter weather is going to strike again and provide
another disappointing payrolls number but we still think the
dollar could strengthen," said Andrew Dilz, currency trader at
Tempus Consulting in Washington.
"If non-farm payrolls come out weaker as we expect, I don't
think it's going to have a huge effect on the Federal Reserve,
as nothing seems to be putting them off track in terms of
Investors were also focused on the European Central Bank's
monetary policy meeting on Thursday, which analysts expect will
result in some form of policy easing to ward off deflationary
risks in the euro zone. That expectation has led to weakness in
the euro against the dollar.
The dollar's gains were also helped by losses in the yen,
which fell for a second straight day as concerns over a
Russia-Ukraine standoff eased.
Markets, however, are keeping an eye on the region after
Russia test-fired an intercontinental ballistic missile from a
base not far from eastern Ukraine to a range in Kazakhstan.
In late trading, the euro was down 0.1 percent versus the
dollar at $1.3728, pulling back from Friday's two-month
high of $1.3824.
Despite better-than-expected retail sales data for January
and a survey that showed euro zone private-sector business
growing at its fastest pace in more than 2-1/2 months in
February, investors sold the euro on the risk that the ECB could
loosen policy on Thursday.
Inflation is running well below the ECB's target of just
under 2 percent, and the central bank is under pressure to pull
it out of a "danger zone" that threatens to stall the region's
Indeed, overnight euro/dollar implied volatility,
a gauge of how sharp currency swings will be, jumped to 11.50
percent from around 5 percent at the start of the week.
The euro was flat against the yen at 140.42 yen
after gaining 0.8 percent on Tuesday, while the dollar rose 0.1
percent at 102.29 yen after posting its biggest one-day
gain since mid-January a day earlier.
The greenback was also slightly up against the Swiss franc
at 0.8870 franc.
Demand for safety faded on Tuesday after Russian President
Vladimir Putin played down the prospect of a war in Ukraine, but
market players remained on watch as Russian stock markets
fell more than 1 percent on Wednesday.