RTRS:Dollar rises, U.S. jobs data key to more gains
(Reuters) - The dollar extended gains versus the yen on Friday, and rose against a basket of currencies as U.S. yields climbed on expectations that an upbeat jobs report will prompt the Federal Reserve to withdraw stimulus soon.
Macro funds were buying the U.S. currency in the European session with the dollar rising 0.2 percent to 99.75 yen after having surged about 1.7 percent on Thursday, its biggest one-day percentage gain in about four months. The dollar index was up 0.1 percent at 82.413.
Weekly jobless claims and manufacturing showed the world's largest economy was recovering steadily. The robust data pushed U.S. yields higher and widened the gap over German, British and Japanese bonds and buoyed the dollar.
Investors are looking to nonfarm payrolls data, to be released later on Friday, with expectations that July will show a solid rise. A Reuters survey pointed to an increase of 184,000 in nonfarm payrolls with the jobless rate seen dropping to 7.5 percent from 7.6 percent.
"A 200,000 plus outcome and 0.2 percentage point fall in the unemployment rate to 7.4 percent would take 10-year yields above 2.74 percent - the high seen after June's labour data," said Tom Levinson, strategist at ING.
That would intensify talk that the Fed may start withdrawing stimulus in September and see the dollar index touch 83, he added.
On the other hand, the dollar could slide if the jobs data falls short of expectations.
"I think you have to be careful this time," said Daisuke Karakama, market economist for Mizuho Bank in Tokyo. "There was talk in the market yesterday that the number could be about 205,000 or 210,000, so I get the sense that these types of numbers have already been factored in."
The Fed's statement on Wednesday offered no fresh hints that it was preparing to reduce its monetary stimulus at its next policy meeting in September, and market players are looking to U.S. data for clues on when such tapering might start.
The euro held steady at $1.3215, having retreated from a six-week high of $1.3345 set on Wednesday. Investors shrugged off former Italian Prime Minister Silvio Berlusconi's conviction for tax fraud as many perceived it did not present an immediate threat to the coalition government in Rome.
The euro had come under pressure on Thursday after the European Central Bank left interest rates at a record low 0.5 percent and affirmed they will remain there for some time to come.
