RTRS: FOREX-Euro steady, seen hemmed in before U.S. jobs data
Euro steadies, seen hemmed in by sovereign bids and offers
* Weak U.S. jobs report could put dollar under pressure
* Dollar/yen up on Japanese buying after holidays
By Jessica Mortimer
LONDON, May 6 (Reuters) - The euro steadied against the dollar on Friday after steep losses the previous day, helped by sovereign demand and with investors concerned a weak U.S. jobs report could weigh on the greenback.
The euro stayed above $1.4500, with traders citing sovereign buying, as well as demand related to talk of an options structure at $1.45. They saw limited gains, however, as sovereigns were said to be looking to take profits after buying at lower levels, with offers seen at $1.4580-85. The euro also faced resistance at its 21-day moving average around $1.4576.
The euro EUR= was steady at $1.4538 after falling nearly 2 percent on Thursday to $1.4510. However, further falls in oil prices left investors wary of buying back riskier assets. [O/R]
U.S. April non-farm payrolls, due at 1230 GMT, were forecast to rise 186,000, but some analysts said there was a risk of a weaker number given recent worse-than-forecast weekly jobless claims and private payrolls data. ECONUS [ID:nN05211728]
"Any reading that is short of the consensus would confirm the status quo, that the Federal Reserve does not have a clear timeline for when it will start removing stimulus and for this reason we expect dollar weakness to continue," said Stephan Maier, currency strategist at Unicredit in Milan.
Traders said a weak report would weigh on the dollar, after it rose around 1.5 percent versus a basket of currencies on Thursday, its biggest one-day gain since mid-October.
The catalyst for the dollar's rebound was a massive fall in commodities on Thursday. Brent crude LCOc1 dived a record $12 a barrel and silver XAG= slumped by nearly $5, its biggest one-day decline since 1980.
The dollar index .DXY was down 0.1 percent at 74.126, still well above a three-year trough of 72.696 hit earlier in the week.
The euro fell sharply on Thursday after European Central Bank President Jean-Claude Trichet did not signal a June rate hike. Analysts said this showed investors had become overly bullish about the rates outlook and they were forced to pare back long euro positions. [ID:nLDE7440GG]
However, the euro was expected to remain supported by expectations euro zone rates would rise in the coming months.
"We've had a healthy correction in euro/dollar, but I don't think this is a sea-change in sentiment and wouldn't expect it to move much below $1.45," said Paul Robson, currency strategist at RBS.
The euro gained some support on Friday after ECB official Ewald Nowotny said the bank's stance should not be interpreted as dovish. [ID:nHEL010146] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
The yen fell after a big rise the previous day, easing immediate concerns about possible further official intervention to stem its gains. Traders reported demand to sell yen from Japanese accounts as they returned from the Golden Week holiday.
The dollar was up 0.2 percent at 80.31 yen JPY=, bouncing from a seven-week low of 79.57 yen hit on Thursday and tackling resistance from the bottom of the Ichimoku cloud at 80.493. A weak U.S. jobs reading could push the yen back up, however.
Market players saw limited chances of intervention from Japanese authorities, let alone joint action by the Group of Seven countries, after Japanese Finance Minister Yoshihiko Noda said on Thursday that current forex moves appeared different from those seen when the G7 intervened in March. [ID:nL3E7G525S]
Commodity currencies recovered, led by strong gains for the Australian dollar, which was up 0.85 percent at $1.0671 AUD=D4, benefiting after the Reserve Bank of Australia warned a further rate rise would be needed. [ID:nL3E7G607H]
"As some players had built up long positions in the Aussie and the euro, based on the rise in commodities, further falls in commodities could mean more position unwinding in currency markets," said Makoto Noji, currency analyst at SMBC Nikko Securities in Tokyo.
"I do think that what we are seeing is position adjustment rather than the reversal of a trend," he added.
