* U.S. Feb. jobs data, Bernanke, ECB meeting in focus
* Divergent euro zone-U.S. rate view supports euro
* Swiss franc hits record high vs dollar, more gains seen
(Adds IMM data, updates prices)
By Wanfeng Zhou
NEW YORK, Feb 25 (Reuters) - The Swiss franc may extend its
rally next week as tensions in Libya and fears of contagion
prompt investors to seek safety, while the U.S. dollar's fate
could hinge on the monthly U.S. jobs report.
The Swiss currency on Friday posted its biggest two-week
advance against the dollar in eight months as investors feared
the uprising in Libya could spread to other oil-producing
countries. A spike in energy prices could hurt U.S. consumer
spending and crimp global economic growth.
"So far the situation remains fluid. It doesn't look like
it's going away anytime soon. So as long as it persists, the
Swiss franc should benefit," said Mary Nicola, currency
strategist at BNP Paribas in New York.
U.S. jobs data for February, due next Friday, will also be
a major focus for investors. Economists polled by Reuters are
expecting an increase of 178,000 jobs, up sharply from a meager
36,000 gain in January. []
A better-than-expected jobs report could boost optimism
about the labor market, which has been a weak spot in the
economic recovery, and benefit the dollar.
The dollar fell 4.7 percent against the Swiss franc over
the last two weeks, the largest decline since late June. It
earlier hit a record low of 0.9229 <CHF=EBS> on trading
platform EBS, before recovering to last trade at 0.9284, up 0.3
percent.
The euro last traded at 1.2767 Swiss francs <EURCHF=EBS>,
down 0.1 percent on the day and off 1.3 percent this week.
Fed Chairman Ben Bernanke testifies to Congress on Tuesday
and Wednesday, and analysts think he is unlikely to suggest
much appetite within the central bank for scaling back a $600
billion government bond-buying program launched in November.
"Fed Chairman Bernanke will likely repeat the logic
underlying the Fed's comfort in his semi-annual testimony to
Congress this week. It is a stance that will continue to
undermine the USD relative to its more hawkish peers
elsewhere," said Daragh Maher, deputy head of global FX
strategy at Credit Agricole CIB in London.
HAWKISH ECB?
The European Central Bank is expected to leave interest
rates at a record low of 1 percent next week. Investors will
closely monitor comments by ECB head Jean-Claude Trichet for
clues about the outlook for monetary policy.
Recent inflation-fighting rhetoric from Bank officials have
boosted expectations euro zone interest rates will rise more
quickly than those in the United States.
"With inflation rising, that could be a main concern, so we
could see them pick up their hawkish rhetoric," BNP Paribas'
Nicola said.
The latest positioning data showed currency speculators
boosted bets in favor of the euro in the latest week to the
highest since October. They also increased long positions in
the Swiss franc. []
The euro last traded down 0.4 percent at $1.3743 <EUR=EBS>,
reversing earlier gains that had taken it to $1.3839, to the
highest level against the dollar in more than three weeks.
The next upside target lies around $1.3862, this year's
high. A break above could see the euro rise toward the $1.3950
area, the 200-week moving average, followed by strong
resistance at the $1.40 level.
The dollar rebounded on Friday, helped by a retreat in oil
prices after Saudi Arabia stepped up crude supply. The inverse
relationship between the greenback and oil has strengthened
this week.
Against a basket of currencies, the dollar rose 0.3 percent
to 77.281 <.DXY>, after earlier hitting a low of 76.945.
Higher oil prices and expectations the Fed will lag other
major central banks in tightening hit the dollar this week,
sparking speculation the greenback has lost its safe-haven role
despite tensions in the Middle East and Africa.
But Adam Cole, global head of FX strategy at RBC Capital
Markets in London, said risk appetite is playing "second
fiddle" to interest rate expectations.
To suggest that the U.S. currency has lost its safe-haven
role, he added, "overlooks the upside risks to the dollar if
unrest in the Middle East continues to spread beyond a small
number of hot spots and hence spills over into a deeper and
more broadly based sell-off in risky assets."
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by
Dan Grebler)
