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FOREX-Dollar loses steam and wavers ahead of US jobs data

Published 01/09/2016, 12:39 pm
Updated 01/09/2016, 12:40 pm
© Reuters. FOREX-Dollar loses steam and wavers ahead of US jobs data
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* Dollar/yen pulls back from 1-month highs

* AUD edge off low after slightly better than expected China data (Adds details and quotes, updates prices)

By Shinichi Saoshiro

TOKYO, Sept 1 (Reuters) - The dollar wavered against the yen and euro on Thursday, its advance stalling ahead of a closely-watched U.S. non-farm jobs report on Friday which is expected to shape the market's near-term interest rate expectations.

Earlier in the week, the U.S. currency had carved out significant gains against its peers following comments from Federal Reserve Chair Janet Yellen last Friday at a central bankers' gathering in Jackson Hole, Wyoming that revived near-term rate hike prospects.

The market awaited Friday's jobs report to see if U.S. labour conditions are strong enough to justify the Fed's monetary policy stance.

"The dollar and Treasury yields had risen in tandem following Jackson Hole last week but that phase came to an end yesterday. The dollar will not be making much further headway before Friday's non-farm employment report," said Shin Kadota, chief Japan FX strategist at Barclays (LON:BARC) in Tokyo.

The euro was flat at $1.1162 EUR= , having rebounded on Wednesday from a three-week low of $1.1123. The dollar index .DXY was little changed at 95.929 after pulling back overnight from a three-week peak of 96.255.

Against the safe-haven yen, the dollar was down 0.2 percent at 103.21 JPY= as the region's equities went on the defensive after an overnight slide in crude oil prices dragged down Wall Street shares on Wednesday.

The greenback had briefly advanced to a one-month high of 103.540 yen overnight on a slightly stronger-than-expected U.S. ADP National Employment Report for August, but its rise was tempered after the August Chicago purchasing managers' index (PMI) fell short of expectations. ECONUS

Data due later in the day include the euro zone Markit manufacturers' PMI and U.S. Institute for Supply Management's (ISM) manufacturing activity PMI. ECONEZ

"Even if Friday's U.S. jobs data helps boost the dollar/yen, it faces significant technical hurdles. As such the dollar may not be able to sustain a prolonged advance even if the data is strong," said Junichi Ishikawa, a forex analyst at IG Securities in Tokyo.

"So far this year dollar/yen failed to pierce the Ichimoku cloud during its last three uptrends in January, May and July. But in the current bull phase, dollar/yen is yet to even reach the Ichimoku cloud," Ishikawa said.

Elsewhere, the Australian dollar was given some breathing space after official PMI data showed activity in China's manufacturing sector picked up unexpectedly in August, albeit modestly. ECONCN

The Aussie, often used as a proxy of China-related trades, edged up 0.3 percent at $0.7540 AUD=D4 after probing a one-month trough of $.07490 on Wednesday in the wake of an overnight slide in crude oil prices.

The Canadian dollar, another commodity-linked currency, was little changed at C$1.3102 CAD=D4 versus the dollar after hitting C$1.3145 overnight, its weakest in three weeks. (Editing by Kim Coghill)

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