* Euro steadies after Thursday's drop
* ECB Draghi's comments on deposit rates dents euro
* Focus turns to U.S. jobs data later on Friday
By Masayuki Kitano
SINGAPORE, May 3 The euro steadied somewhat
versus the dollar on Friday, but the single currency continues
to face headwinds after sliding the previous day when the
European Central Bank cut interest rates and held out the
possibility of further policy action.
The ECB cut its benchmark refinancing rate by 25 basis
points to a record low 0.5 percent on Thursday in a widely
The single currency came under pressure after ECB President
Mario Draghi said the bank is technically ready for negative
deposit rates and noted downside risks to the economy.
A negative deposit rate would effectively penalise banks for
hoarding cash. Such a move could drive money out of the euro
zone into other higher-yielding assets and encourage the banks
to lend out money rather than hold it at the central bank.
"One of the frustrations of the ECB is the monetary
transmission mechanism has broken down. I think in order to aid
the repair of that, there's a likelihood that we'll see further
measures," said Mitul Kotecha, Hong Kong-based head of global
foreign exchange strategy for Credit Agricole.
Such talk of further possible ECB action may weigh on the
single currency, he said.
"I think that will help cap the euro at a time when the
growth outlook in Europe continues to remain very weak."
The euro edged up 0.1 percent to $1.3074, but
remained well below a two-month high of $1.3243 set on Wednesday
on trading platform EBS.
Possible support lies at its 55-day moving average near
$1.3030. Lower down, there is more support near $1.2970, which
roughly coincides with both the 200-day moving average and the
bottom of the daily Ichimoku cloud.
On the top side, resistance lies near $1.3159, the euro's
100-day moving average.
U.S. JOBS DATA
Investors' focus now shifts to Friday's U.S. non-farm
payrolls report for April. Economists polled by Reuters are
looking for job growth of 145,000 last month, up from 88,000 for
March. The unemployment rate is seen holding steady at 7.6
Given a weak reading on private sector hiring released
earlier this week, market players probably suspect that the jobs
data might come in weaker, said Satoshi Okagawa, senior global
markets analyst for Sumitomo Mitsui Banking Corporation in
"I don't think there will be that much of an impact even if
it were to come in at around 100,000 or so," Okagawa said,
referring to nonfarm payrolls.
If the jobs data adds to recent signs of a softening in the
U.S. economy, it could intensify speculation that the Fed is
unlikely to scale back its bond purchases very soon, and that
its next move might even be to increase its debt buying
programme. Such talk would likely weigh on the dollar.
In an encouraging sign for the U.S. labour market's outlook,
data released on Thursday showed that the number of Americans
filing new jobless benefits claims fell sharply last week to a
The report on jobless claims helped give a lift to the
dollar against the yen on Thursday, although it has no direct
bearing on Friday's April jobs data.
The dollar held steady at about 98.00 yen, having
pulled up from a two-week low of 96.99 yen set on April 30.
The greenback hit a four-year high of 99.95 yen in April
after the Bank of Japan unveiled its drastic monetary stimulus
programme, but its rally has stalled in the past few weeks after
it met firm resistance near the psychologically important 100