* Dollar index hits one-week highs on solid jobs data
* Solid job data raises prospects of more hawkish Fed
* ECB leaves rates at record low, keeps QE door open
* U.S. markets closed on Friday for Independence Day
(Adds details, quotes)
By Ian Chua and Shinichi Saoshiro
SYDNEY/TOKYO, July 4 The dollar held firm at
one-week highs on Friday, having pulled sharply ahead of its
peers after surprisingly strong U.S. jobs growth added to hopes
the economy is pulling out of a first quarter slump.
The dollar index climbed as far as 80.315 after U.S.
employers blew away most forecasts by adding 288,000 jobs last
month. It was last at 80.205, well off an eight-week trough of
79.740 plumbed earlier in the week.
Against the yen, the greenback hovered near a two-week high
at 102.13. It was up 0.7 percent so far this week, on
track for its best performance in 2-1/2 months.
"The data supports expectations for the Fed to begin coaxing
the Fed funds rate higher by the middle of next year," analysts
at BNP Paribas wrote in a note to clients.
"Markets are now on alert for any change of message from the
Fed in response to the better data."
The market will have an opportunity to gauge any change of
message, particularly from Fed Chair Janet Yellen, at the Fed's
July 29-30 policy meeting and the annual global central banking
summit at Jackson Hole, Wyoming, in August.
"The dollar's gains look limited considering how strong the
jobs data was, as participants are still unsure how U.S.
inflation pans out," said Junichi Ishikawa, market analyst at IG
Securities in Tokyo.
"The possibility of Fed's Yellen shifting to a more hawkish
stance has added to the uncertainty. Upcoming data such as
retail sales, consumer prices and personal consumption
expenditure (PCE) may help clear the mist, if they point to an
inflationary trend taking hold."
The U.S. two-year Treasury yield jumped to a 10-month peak
and Wall Street hit a record high, with the Dow
ending above 17,000.
The euro, further weighed by a dovish-sounding European
Central Bank, shed more than half a U.S. cent to $1.3605,
on course to lose more than 0.3 percent on the week.
The single currency fell back from a one-month high against
its Japanese counterpart to 138.96, from 139.30.
The ECB, as expected, left interest rates steady at record
lows on Thursday but said it stood ready to do more if needed.
However, it sounded confident that a raft of policy measures
introduced last month will help lift inflation and support bank
The Australian dollar, already on the ropes after the
country's central bank said it was overvalued, fell to its
lowest in over two weeks.
The Aussie plumbed $0.9327, bringing the June 18
trough of $0.9322 into focus. It was last at $0.9357, well off
an eight-month peak of $0.9505 set early in the week.
The Swedish crown took a hammering after the Riksbank cut
its key interest rates by an unexpectedly large 50 basis points
to 0.25 percent.
Adding to the drama, governor Stefan Ingves had wanted a
quarter-point cut, but was outvoted by his rate-setting
The Swedish crown fell to its lowest against the
euro in almost three years, reaching 9.3900 crowns per euro from
9.1950 before pulling back a little to 9.2910. Against the
dollar, it slumped to a two-year low of 6.8749 per dollar
Meanwhile, despite the jobs-inspired rally, the greenback
was stuck near a fresh six-month low of C$1.0620 hit
against its Canadian counterpart on Thursday. The dollar only
managed a very slim gain on sterling, which stayed near a
six-year peak of $1.7180.
(Editing by Shri Navaratnam)