* U.S. private sector hiring rose by the most in a year
* Euro falls versus Swiss franc on mixed data, ahead of SNB
* Aussie hits three-month low versus dollar after growth
By Wanfeng Zhou
NEW YORK, Dec 4 The dollar rose against the euro
and the yen on Wednesday after a batch of data boosted
expectations the Federal Reserve may start scaling back its
massive stimulus program sooner than expected.
The euro fell on concern about an uneven recovery in the
currency bloc. It hit a two-month low versus the Swiss franc on
hedge funds selling ahead of next week's Swiss National Bank
meeting, at which it is likely to reiterate its commitment to
the euro/Swiss peg of 1.20 francs.
U.S. private sector hiring rose by the most in a year in
November, while economic activity in the private sector bounded
back, reports showed.
Separate data showed the U.S. trade deficit narrowed in
October as exports hit a record high, pointing to a pick-up in
global demand that should help to support domestic growth in the
"This is probably a slight upside bias to the dollar," said
Omer Esiner, chief market analyst at Commonwealth Foreign
"However, I still think there's a very very low chance of
any Fed taper before 2014 and so that might ultimately keep the
dollar largely range bound heading into the end of the year."
The euro fell 0.4 percent to $1.3531. Service sector
data showed activity in Italy and France contracting in November
but expanding in Spain and Germany, highlighting the divergence
in the bloc.
The dollar gained 0.1 percent to 102.60 yen, having traded
as high as 102.83, according to Reuters data. The dollar index
was slightly lower on the day at 80.907.
Markets are eyeing U.S. gross domestic product data on
Thursday and the non-farm payrolls report on Friday, which
investors will study for clues about when the Fed will taper its
monetary stimulus. Its next policy meeting is on Dec. 17-18.
Many investors and analysts expect the Fed to begin reducing
stimulus at its March meeting, so an upbeat employment report
would increase speculation that tapering could come earlier.
Manuel Oliveri, currency strategist at Credit Agricole who
expects the Fed to begin tapering in January, said this could be
the most important week of the year for the dollar.
He added: "There's a lot of risk for the dollar to
appreciate on the back of surprise data from the United States."
The euro fell 0.1 percent to 1.2276 Swiss franc,
having hit as low as $1.2258 on trading platform EBS, the
weakest since early October.
The European Central Bank meets to set policy on Thursday,
after last month unexpectedly cutting its key interest rate to a
record low of 0.25 percent.
"People are (also) looking at what could potentially happen
at the ECB tomorrow," said Geoffrey Yu, currency analyst at UBS.
"There might be a few people expecting them to ease. I don't
think we're going to get anything."
The Australian dollar fell to a three-month low
after data showed 0.6 percent growth in GDP in the third
quarter, below analysts' median forecast of 0.8 percent.
The Aussie fell 1.4 percent to $0.9010, breaking through the
key support level of $0.9050/55. A sustained break could see a
retracement all the way to this year's low of $0.8848.
Hedge funds have been negative on the Aussie for some time.
CQS founder Michael Hintze, whose firms runs around $12 billion,
told Reuters last month that he was short the Australian dollar,
citing the "very, very clear" wish of central bank governor
Glenn Stevens for it to weaken.