Dollar moves narrowly before US jobs data

TOKYO: The dollar moved narrowly against the euro in Asia on Friday as dealers awaited the release of US employment data later in the global trading day.

The European unit fetched $1.4339 in Tokyo in the afternoon, marginally down from $1.4356 in New York late Thursday. The European common currency held firm at 116.54 yen against 116.57 yen. The dollar inched up to 81.28 yen from 81.20 yen.

The European Central Bank on Thursday hiked its key interest rate by 0.25 percentage points to 1.50 percent in an expected move as it battles to tame inflation.

The decision sent the euro up against the dollar, supported by an ECB announcement to suspend its collateral criteria for debt issued or guaranteed by Lisbon, meaning Portuguese banks will not be cut off from central bank funds and removing the threat of a liquidity crunch.

Portugal came under intense pressure this week after Moody's slashed its debt rating to junk status, pushing up the price Lisbon has to pay to raise fresh funds.

"The ECB's announcement to accept Portuguese debt as collateral gave some relief to the market," said Dai Sato, dealer at Mizuho Corporate Bank.

"But the market moved little in Asian trading hours before the release of the US jobs report," Sato said.

"After expectation for positive numbers boosted US stocks, traders are cautious that a disappointing result could reverse the market's direction."

If the data turns out to be better than expected, the euro may rise to $1.4450 as investors buy riskier currencies, said Tomohiro Nishida, senior dealer at Chuo Mitsui Trust and Banking.

"A better-than-expected reading will likely help put aside the view that the US economic recovery is slowing," he said.

But if the jobs data falls short of market expectations, the euro may fall below 1.4200, he added.

US stocks surged Thursday on encouraging jobs data from the payrolls firm ADP which said private non-farm businesses added 157,000 jobs in June, a solid jump after a weak 36,000 increase from April to May.

A better-than-expected reading will likely lead to higher share prices and gains in US Treasury yields, which will in turn prompt dollar buying, Junichi Ishikawa, FX analyst at IG Markets Securities, told Dow Jones Newswires.

The dollar was lower against other Asian currencies, falling to Sg$1.2200 from Sg$1.2262 on Thursday, to 1,057.50 South Korean won from 1,063.45, to 42.75 Philippine pesos from 42.81 and to 30.24 Thai baht from 30.33.

It edged down to Tw$28.76 from Tw$28.80 and to 8,521.00 Indonesian rupiah from 8,537.50.

Copyright AFP (Agence France-Presse), 2011