(Changes dateline and byline, updates prices, adds quotes)
By Jamie McGeever
LONDON, Aug 3 (Reuters) - The dollar steadied against major currencies on Friday, hugging tight ranges as investors shifted focus to upcoming U.S. employment data from the credit and stock market volatility that has dominated trading in recent weeks.
The monthly non-farm payrolls report could give a clearer picture of the health of the U.S. economy and help set the tone in currency markets for the next week.
Steadier credit and global equity markets over the past 24 hours have helped add a veneer of calm to foreign exchanges. But many analysts say markets remain on edge.
"It's not the focus it might have been if we were living in more normal times," said Steve Barrow, head of currency strategy at Bear Stearns, of the jobs report.
The market's knee-jerk reaction to a below-consensus jobs report would likely be to sell the dollar and unwind yen-funded carry trades, and to buy the dollar on a solid report, he said.
The dollar has held up relatively well during the latest bout of financial market volatility, as investors have reduced their exposure to risk across the board and cut positions, be they profitable or not.
"Despite the data today, it's still down to whether these credit tensions persist. If credit tensions are exacerbated, we could see a slightly stronger dollar and stronger yen," Barrow said.
At 0800 GMT, the dollar <JPY=> was flat at 119.15 yen as traders caught their breath after beating the pair down to a four-month low of 117.60 yen on Wednesday.
ADP A GOOD GUIDE?
The dollar index (.DXY: Quote, Profile, Research), a measure of the greenback's value against six heavily traded counterparts, was steady at 80.74.
The euro was also flat at $1.3695 <EUR=> and 163.30 yen <EURJPY=>, after rising on Thursday after the European Central Bank kept interest rates on hold at 4 percent, as expected, but signalled a possible rate hike in September.
The Bank of England also kept interest rates steady on Thursday, at 5.75 percent as expected.
In Asia, the Nikkei share average (.N225: Quote, Profile, Research) closed flat on the day, while European shares were trading marginally lower.
Economists expect the U.S. payrolls data at 1230 GMT to show 130,000 jobs were added outside of the farming sector in July, little changed from 132,000 the previous month [nN01313823].
They also expect the unemployment rate to remain at relatively low 4.5 percent.
The private sector ADP report on Wednesday -- which some analysts say has no predictive powers for payrolls -- suggested only 48,000 jobs were added in July.
"If the weak ADP private employment data earlier works as a good guide for the non-farm payroll and a smaller increase is confirmed, risk positions such as yen-funded carry trades may be negatively affected," wrote Citi currency stratewgists in a note on Friday.
"Though our U.S. economists continue to be cautious about putting too much emphasis on the employment report."
Federal Reserve officials, meanwhile, said on Thursday that problems in the subprime mortgage market have not affected the overall economy for the moment but added that the weakness could weigh on the housing market for longer than previously thought.