* Dollar steady vs yen after previous day's 1.7 pct bounce
* U.S. factory activity accelerates, highest in two years
* Nonfarm payrolls the next hurdle for U.S. dollar
* Aussie dollar hits fresh 3-year low
By Masayuki Kitano
SINGAPORE, Aug 2 The dollar held steady versus
the yen on Friday, clinging to hefty gains made the previous day
after better-than-expected U.S. data stirred hopes for an upbeat
nonfarm payrolls report.
The dollar was little changed on the day at 99.56 yen
after having surged about 1.7 percent on Thursday, the
greenback's biggest one-day percentage rise against the yen in
about four months.
U.S. data on jobless claims and manufacturing that showed
the world's largest economy was recovering steadily had fuelled
Thursday's rally in the dollar.
Investors are now looking forward to nonfarm payrolls data,
to be released later on Friday, with greater expectations that
July will show a solid rise, which could increase the likelihood
that the Federal Reserve will start scaling back its monetary
stimulus later this year.
A Reuters survey of economists pointed to an increase of
184,000 in nonfarm payrolls. The jobless rate is seen dropping
to 7.5 percent from 7.6 percent.
With expectations already running high, however, analysts
said the dollar could slide if the jobs data were to disappoint.
"I think you have to be careful this time," said Daisuke
Karakama, market economist for Mizuho Bank in Tokyo. "There was
talk in the market yesterday that the number could be about
205,000 or 210,000, so I get the sense that these types of
numbers have already been factored in."
The dollar index, which measures the greenback's value
against a basket of currencies, held steady at 82.363,
having bounced from a six-week low of 81.407 set on Wednesday.
The Fed's post-meeting statement on Wednesday had offered no
fresh hints that the U.S. central bank was preparing to reduce
its monetary stimulus at its next policy meeting in September,
and market players are looking to U.S. economic data for clues
on when such tapering might start.
Short-term market positioning is probably tilted toward
being long the dollar, said Satoshi Okagawa, senior global
markets analyst for Sumitomo Mitsui Banking Corporation in
"If we get a bad number the dollar might fall sharply," he
Still, the greenback will probably head higher over the
longer term since the Fed seems to be moving in the direction of
monetary tightening, even if the timing of any interest rate
hike is still far off, Okagawa said.
"I think we will see some back and forth moves. But when you
take a look back at some point, you'll end up realising that the
dollar has risen quite a bit," he added.
The euro held steady at $1.3209, having retreated
from a six-week high of $1.3345 set on Wednesday.
The euro had come under pressure on Thursday after the
European Central Bank left interest rates at a record low 0.5
percent and affirmed that they will remain there for some while
to come and could yet fall further.
The Australian dollar, already on the back foot, dipped to a
fresh three-year low of $0.8889 before recovering a bit
to last stand at $0.8910. It was on track to end the week down
around 3.9 percent.
Analysts in a Reuters poll conducted this week were
unanimous in expecting a quarter point rate cut at Tuesday's
Reserve Bank of Australia policy meeting.
Slower growth in China, Australia's top export market, a
domestic economy that is growing below potential and a tame
inflation outlook mean the RBA has room to lower its cash rate
to a record low 2.5 percent.