Friday June 5, 2009 - 11:49:57 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar on hold before payrolls; pound slides
* Dollar edges up before U.S. non-farm payrolls data
* UK political uncertainties slam stg; hits 2-wk low vs euro
* UK's Brown to keep finmin Darling in cabinet reshuffle
* Dollar index at 79.54 .DXY; pound down 0.5 pct vs dlr
(Adds quotes, updates prices)
By Tamawa Desai
LONDON, June 5 (Reuters) - The dollar edged up slightly on
Friday as investors braced for key U.S. payroll data to gauge
the economic outlook, while UK political uncertainty hit
Weekly U.S. employment data released on Thursday suggested
the haemorrhaging of jobs in the world's largest economy may be
easing, although further evidence will come later on Friday with
the May non-farm payrolls report.
The U.S. payrolls report is expected to show the economy
shed 520,000 jobs in May and the unemployment rate rose to 9.2
percent from April's 8.9 percent. Data is due out at 1230 GMT.
Analysts said it could take shockingly poor figures to spark
risk aversion, especially as investors are well aware that job
losses will not dramatically decrease in the near term after
bankruptcy filings by General Motors and Chrysler.
"The current market theme of higher U.S. bond yields,
stronger equities and weaker dollar is well intact," said
Geoffrey Kendrick, currency strategist at UBS.
Given the rate of decline in payrolls will likely moderate,
"a weak dollar run could go a little further," he added.
By 1055 GMT, the dollar index, a gauge of the greenback's
performance against a basket of six currencies, was up 0.1
percent on the day at 79.545 .DXY. It hit the year's low of
78.334 on Tuesday.
The euro was flat at $1.4177 <EUR=>.
"The rise in yields seems very specific to the government
bond sector, and is not spreading to other credit markets. This
suggests a higher level of risk appetite is being maintained,
pushing equity markets higher and supporting cyclical
currencies, with the exception of sterling," said Ian Stannard,
senior currency strategist at BNP Paribas.
British Prime Minister Gordon Brown fought calls for his
resignation by moving forward a cabinet reshuffle on Friday.
Brown will keep his finance minister Alastair Darling,
sources told Reuters. There had been speculation Darling would
be replaced by Brown's ally and schools minister, Ed Balls.
But Brown still faces threats -- results of European
Parliament and local elections is expected to show a drubbing
for the Labour Party, and there may be a possible challenge to
his leadership from rebels within his party.
Four ministers have quit the government, with one publicly
urging Brown to step down to improve his party's chances at a
general election due within a year.
Such concerns fed into a market already positioned to take
the pound lower after a steep rally in the past few weeks.
"The market is waking up to what a mess politics are in the
UK and that is causing sterling to underperform," said Adam
Cole, global head of FX strategy at RBC Capital Markets.
The euro was up 0.3 percent at 88.02 pence, after earlier
rising to 88.67 pence, its highest since late May.
Sterling was down 0.4 percent at $1.6104 <GBP=D4>. It had
hit a one-week low of $1.6017.
Commodity-linked currencies held firm after oil hit a
seven-month high near $70 a barrel and gold jumped nearly 2
percent the previous day. [O/R] [GOL/]
The Australian dollar rose 0.4 percent to $0.8056 <AUD=>,
consolidating after a wave of profit-taking knocked it off an
eight-month high of $0.8265 hit on Wednesday.
(Additional reporting by Jamie McGeever; Editing by Toby
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