* Euro hits five-week highs vs USD in wake of ECB
* USD near-term outlook hinges on non-farm payrolls
* Strength of US jobs will shape expectations for Fed taper
By Ian Chua
SYDNEY, Dec 6 The euro traded at five-week highs
against the dollar early in Asia on Friday, having powered
higher overnight after the European Central Bank gave no fresh
indication that it would ease policy anytime soon.
While ECB President Mario Draghi said the bank was ready to
take fresh policy action to support a fragile recovery, he was
light on details including whether the bank would use a negative
Draghi also noted that liquidity in the banking system had
improved since the last cash injection, or LTRO, and attached
conditions for any repeat. These comments saw German bond yields
jump to seven-week highs, which in turn helped underpin the
"The comments do not indicate any sense of urgency on the
part of the ECB," London-based Martin McMahon, economist at
Commonwealth Bank wrote in a note to clients.
"If there is to be a new LTRO, the ECB wants 'to make sure
that it reaches the economy'. Again the comments do not indicate
that follow-up LTROs are imminent."
The common currency last stood at $1.3672, having
climbed more than 0.5 percent on Thursday to $1.3677, a level
not seen since Oct. 31. Against the yen, it edged up to 139.14
, but struggled to break above a five-year peak of
140.03 set earlier in the week.
The euro also hit one-week highs against sterling
, which showed little reaction to the Bank of
England's decision to keep interest rates unchanged.
The common currency was fetching 83.68 pence,
having risen as high as 83.79 earlier.
The rebound in the euro knocked the dollar index to a
five-week low of 80.231. Further downside in the greenback
hinges on how U.S. jobs data due later on Friday turns out.
Analysts polled by Reuters expect the U.S. economy to have
created 180,000 jobs in November, following 183,900 in the
Any upside surprise will no doubt keep alive expectations
the Federal Reserve may start to scale back its bond-buying
stimulus program at the December 17-18 meeting. Such an outcome
could bolster the U.S. dollar.
Conversely, a soft report will see the market expect the Fed
to maintain its stimulus program for longer, a possible negative
for the greenback but positive for riskier assets.
"A dismal development may encourage the FOMC to carry the
highly accommodative policy stance into 2014 in order to
encourage a stronger recovery," said David Song, currency
analyst at DailyFX.