* Demand for euro zone strugglers' bonds supports euro
* French and Spanish data supportive
* Norwegian crown, pound fall after data
* Investors to take lead from U.S. jobs report
By Patrick Graham and Laurence Fletcher
LONDON, Jan 10 Demand for euro zone peripheral
government bonds kept the euro away from a one-month low against
the dollar on Friday before jobs data seen as crucial to the
U.S. currency's outlook.
A handful of other G10 currencies were pushed around by
divergent economic data in early trade; the pound and the
Norwegian crown suffered while the Swedish crown recovered a
chunk of this week's losses.
A key theme at the start of 2014 is the divergence of
outlooks on monetary policy, from which the pound and dollar
have both, on balance, benefited at the expense of the euro.
European Central Bank President Mario Draghi added to
pressure on the euro on Thursday by firming up the bank's
promise to take more action to lower market borrowing costs if
But while the euro zone economy still looks fragile,
government finances and banking in the bloc broadly look far
healthier than six months ago, and players are starting to trade
heavily on improvement in its debt-laden southern half.
"There's definitely a strong repricing of the euro going
on," said Arne Lohmann Rasmussen, head of FX research at Danske
Bank in Copenhagen. "People want to take part in the very strong
performance and carry being provided by southern Europe."
The euro was last down just 0.06 percent on the day at
$1.3598 having hit a low of $1.3548 hit on Thursday.
Portuguese bond yields slipped further to near seven-month
lows on Friday after Lisbon's first 2014 debt sale drew solid
demand on Thursday and before of review of the country's credit
ratings outlook later in the day.
Data also showed the French economy - seen by many as a weak
link in the currency bloc - grew 0.5 percent in the fourth
quarter, while Spanish and French industrial output figures were
"There's an anticipation of European data on the strong
side," said Hans Redeker, head of global currency strategy at
"You (also) have some corrective activity," he said, adding
that investors who sold the euro after Draghi's comments would
be more concerned with Friday's U.S. jobs data.
The dollar has made a positive start to 2014, buoyed by the
prospect of the U.S. Federal Reserve steadily slowing the flood
of cheap dollars coursing through the market while central banks
in Japan and Europe consider loosening policy further.
Whether that happens will depend on data from the United
States, and the approach Janet Yellen, regarded as a dove set to
be confirmed as the Fed's new chairman, takes to policy.
"The jury is still out on the euro/dollar this year," said
Neil Mellor, currency strategist with Bank Of New York Mellon.
"All it would take is Janet Yellen saying the Fed at some
stage could call a halt to tapering (of bond-buying) and the
whole situation could turn around. And I think she will be very
keen to ensure that the recovery is bedded in before the Fed
withdraws all its stimulus."
Economists polled by Reuters forecast U.S. employers added
196,000 jobs in December, down from 203,000 in November, while
the jobless rate was likely to hold at a five-year low of 7.0
But dealers said that after strong ADP jobs data early in
the week, the market was already expecting a higher number.
"We think it would take a figure of around 250K to move the
market (higher)," said Danske's Rasmussen.