Thursday July 3, 2008 - 09:28:28 GMT
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Reuters - www.reuters.com
FOREX NEWS-Euro poised near $1.59 ahead of ECB verdict, US jobs
* Euro steadies at $1.5874, near 2-month high at $1.5891
* Investors await ECB rate decision, U.S. jobs data
* ECB expected to raise rates to 4.25 pct, hint on outlook
* Swedish crown hits 4-week high vs dlr after Riksbank hikes
(Changes dateline, byline, adds quotes, updates prices)
By Veronica Brown
LONDON, July 3 (Reuters) - The euro hit a two-month high
against a broadly struggling dollar on Thursday, with sentiment
dominated by a widely anticipated European Central Bank rate
decision and key U.S. employment data.
The single currency, hovering near $1.59, is poised for an
assault on April's record high of $1.6018 if events swing in its
The ECB is widely expected to raise euro area borrowing
costs to 4.25 percent, with policymakers having flagged their
intensions, putting its post-decision news conference firmly in
Any hint of monetary tightening beyond July would probably
propel the euro higher still, when contrasted with a hamstrung
U.S. Federal Reserve, caught between rising price pressures and
Inflationary concerns are bound to dominate the ECB's
monetary discussions with record high oil prices rapidly
approaching $145 a barrel CLc1.
"The risks for the dollar are to the downside both in terms
of how hawkish the ECB is going to sound -- we don't think they
can afford to sound any less hawkish than they have been given
inflation at 4 percent -- and (U.S.) payrolls are not going to
be any cause for comfort either," SocGen currency strategist
Phyllis Papadavid said.
"With the euro area fundamentals looking not particularly
positive but relatively better than the U.S., euro/dollar is
going to be a beneficiary of (ECB President Jean-Claude) Trichet
sounding pretty concerned on the inflation front," she added.
Sweden set an early pace on monetary policy verdicts on
Thursday. Its crown currency hit 4-week highs versus the dollar
at 5.9469 crowns <SEK=> after the Riksbank raised its main
policy rate by a quarter point to 4.50 percent and signalled
that more tightening was on the cards.
By 0741 GMT, the euro had risen as high at $1.5891 according
to Reuters data, before trimming the gains to stand flat on the
day at $1.5874 <EUR=>.
The dollar was also steady against a basket of major
currencies at 72.085 .DXY and up 0.1 percent at 105.99 yen
<JPY=>, up around 0.1 on the day.
Stock markets were not seen offering many crumbs of comfort
to the dollar, with world stocks falling to their lowest level
since January, dropping below lows plumbed in March
U.S. non-farm payrolls are vying for dominance with the ECB
in a hefty event calendar, already dubbed "Super Thursday" by
Employment data has already knocked the dollar this week
after the ADP employment report said U.S. private sector
employers slashed 79,000 jobs in June, the largest drop since
November 2002, stirring worries that the government's jobs
report on Thursday will also come in weak. [ID:nL02544800]
According to economists polled by Reuters, the U.S.
government's employment data is likely to show employers cut
60,000 jobs in June after losing 49,000 the prior month.
"Psychologically, a print showing a greater than 100,000
drop ... would likely have a more profound market impact than a
(similar size) upside surprise. The last time payrolls dropped
by more than 100,000 was back in November 2002," Calyon
strategists said in a note to clients.
(Reporting by Veronica Brown; Editing by Mike Peacock)
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