* Pace of U.S. hiring cools in December
* Fed minutes show some policymakers concerned about bond buying
* Dollar retreats from highest level since July 2010 vs yen
By Wanfeng Zhou
NEW YORK, Jan 4 (Reuters) - The dollar pared gains versus the euro and came off a near 2-1/2 year high against the yen on Friday after U.S. jobs data bolstered expectations the Federal Reserve will not be tightening monetary policy anytime soon.
The data came a day after minutes from the Fed’s December meeting showed some policymakers were contemplating an end to their bond-buying program as early as this year, which sparked a rally in U.S. bond yields and the dollar.
The pace of hiring by U.S. employers eased in December, the Labor Department said. Nonfarm payrolls grew 155,000 last month, in line with analysts’ expectations and slightly below the level for November. The jobless rate held steady at 7.8 percent.
“The most important point is that the latest unemployment rate data has been broadly steady for four months now, so even with decent employment growth no downward progress has been made on the unemployment rate,” said Alan Ruskin, head of G10 FX strategy at Deutsche Bank in New York.
The data “will if anything push out the date for an end to QE (quantitative easing), represents solidly risk-positive numbers and will lead to some minor squeeze on recent U.S. dollar longs.”
The dollar typically weakens when investors increase risk exposure by buying higher-yielding currencies such as the Australia and New Zealand dollars, and gains when investors are risk-averse and seeking safe havens.
The euro was last little changed at $1.3042. It touched a session high of $1.3058 after the release of the jobs data.
The dollar rose 0.6 percent to 87.79 yen, off a session peak of 88.40 yen, according to Reuters data, the highest since July 2010.
The Fed said in December they will keep interest rates near zero until the unemployment rate falls to 6.5 percent for as long as estimates of medium-run inflation do not exceed 2.5 percent.