* Strong non-manufacturing ISM, jobs data raise hopes on
* A solid U.S. job report could cement case for a cut in
* Euro soft after Draghi cautious on euro zone recovery
* Euro/sterling near 4-month low after BoE's sanguine on
By Hideyuki Sano
TOKYO, Sept 6 The dollar held firm near a
seven-week high against a basket of currencies on Friday after
solid U.S. economic data sharpened expectations the upcoming
crucial jobs report might make a reduction in the Federal
Reserve's stimulus a done deal.
In contrast, the euro was soft after the head of the
European Central Bank struck a cautious assessment on budding
signs of an economic recovery in the euro zone, saying the bank
is ready to cut rates and inject liquidity.
"The dollar is strong on the back of rising expectations
that rate hikes by the Federal Reserve could come sooner rather
than later," said Shin Kadota, FX Strategist at Barclays.
"We expect the Fed to start tapering its stimulus unless
today's payrolls report was exceptionally weak," he added.
The dollar index stood at 82.626 in early
Asian trade, having risen as high as 82.671 on Thursday, its
highest level since late July, and extending its gain from its
Aug 20 low of 80.754 to 2.4 percent.
Against the yen, the dollar hit a six-week high of 100.24
yen and last stood at 100.10 yen.
The euro traded at $1.3119, near Thursday's
seven-week low of $1.3110.
Spurring fresh interest in the dollar was a report from the
U.S. Institute for Supply Management, which showed services
industries in August posted their fastest growth since December
2005, well above expectations.
The employment component of the ISM services index also
jumped to a six-month high while weekly initial jobless claims
fell more than expected to a seasonally adjusted 323,000.
Separately, data from payrolls processor ADP showed U.S.
private employers added 176,000 jobs in August, nearly matching
The confluence of upbeat data helped to fan expectations the
long-awaited government employment report due at 1230 GMT would
also point to a steady recovery in U.S. employment, and firm up
the case for the Federal Reserve to start winding back its bond
buying this month.
Also supporting the dollar, U.S. bond yields jumped, with
the 10-year yield hitting the 3 percent mark and
the two-year yield moving above 0.50 percent.
Meanwhile, the euro wobbled near multimonth lows against the
British pound, which held firm after the Bank of England showed
no apparent unease over rising British interest rates.
The euro fetched 0.8417 pound, near a four-month
low of 0.8408.