Friday August 1, 2008 - 11:54:29 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar inches up, traders await U.S. jobs data
* Euro down nearly 0.3 percent at $1.5560, nears 1-month low
* Yen up broadly as risk appetite retreats
* Traders braced for U.S. non-farm payrolls
(Changes byline, updates prices, adds quotes)
By Naomi Tajitsu
LONDON, Aug 1 (Reuters) - The dollar neared a one-month high
against the euro on Friday before crucial U.S. jobs data, which
some in the market said may surprise on the upside following an
upbeat employment reading earlier this week.
The yen gained broadly on low risk appetite which knocked
stock prices, prompting some investors to drop higher-yielding
assets in favour of the relatively safe Japanese currency.
The dollar was supported somewhat as traders adjusted
positions before U.S. non-farm payrolls due at 1230 GMT, with
some analysts expecting the number to surprise on the upside
after U.S. private sector jobs added 9,000 jobs this month.
In a Reuters poll, economists forecast that companies shed
75,000 workers in July in what would be the seventh straight
month of job losses.
The market has been anticipating the figures all week, but
some analysts said that the payrolls may ultimately have limited
lasting impact on the dollar, as investors already acknowledge
weakness in the economy, while the financial sector continues to
be punished by the year-long credit crisis.
"There might be an intraday impact, but beyond that it might
not mean much for the dollar," said Bilal Hafeez, foreign
exchange strategist at Deutsche Bank, adding that figures in
line with forecasts would only add to the view that the U.S.
economy is struggling.
"The Fed looks like it's on hold for now, and we'd need
something very surprising for that view to change."
Data on Thursday showing a jump in U.S. weekly jobless
claims and weaker-than-expected second-quarter growth, as well
as a shock revision showing the U.S. economy shrank in the final
quarter of 2007 further stoked the view that the U.S. central
bank is unlikely to raise interest rates anytime soon.
Fed funds rates FEDWATCH show that the Fed may raise rates
by 25 basis points to 2.25 percent by the end of the year,
although the chances of that happening at the central bank's
meeting next week is less than 20 percent.
By 1013 GMT, the euro <EUR=> was down nearly 0.3 percent at
$1.5560, not far from $1.5518 hit earlier in the week for the
first time since late June.
The dollar index .DXY, a measure of the dollar's value
against a basket of currencies, was up 0.2 percent at 73.339.
But the U.S. currency <JPY=> slipped 0.2 percent to 107.55
yen, as the Japanese currency was supported across the board
after European shares FTEU3 fell 0.5 percent, following losses
in Asian and U.S. stocks.
The yen tends to perform well when risk aversion increases
as investors exit carry positions where they sell the
low-yielding currencies to fund purchases of higher yielding
AUSSIE, KIWI FALL
Payrolls figures are notoriously volatile, but analysts said
that the report may be a key hurdle to determine whether the
U.S. currency can extend its gains made in the last month.
"A bigger-than-expected fall in non-farm payrolls could
cause an abrupt reversal in the market's recent optimism,
resulting in lower bond yields and a sell-off in equities." ING
analysts said in a report, adding that it could push the dollar
The Australian and New Zealand dollars fell 0.6 percent
<AUD=> and 0.7 percent <NZD=>, respectively, as both
high-yielding currencies came under selling pressure on
speculation of a near-term cut in Australian interest rates.
The Aussie hit a seven-week low of $0.9355 after the UK's
Daily Telegraph said that the Reserve Bank of Australia would
set out the case for lower interest rates after its policy
meeting next week.
The New Zealand dollar hit a 10-month lows around $0.7260 on
deepening concerns over the local financial sector after the
country's largest fund manager said it was suspending activity
in one of its funds.[ID:nWEL205638]
(Editing by David Christian-Edwards)
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