* Data shows heavy US private-sector job losses in March
* Euro zone unemployment rate 8.5 pct, weighs on euro
* Markets keep eye on G20, ECB
(Updates prices, adds comments, details, changes byline)
By Wanfeng Zhou
NEW YORK, April 1 (Reuters) - The U.S. dollar edged higher
against the euro on Wednesday on expectations the European
Central Bank would cut interest rates and possibly announce
unconventional steps to boost the economy.
Investors were also watching leaders from the Group of 20
high-income and developing countries' meeting in London, to see
whether they adopt coordinated measures to ward off a deepening
global slump.
Analysts said data on Wednesday, which showed euro zone
unemployment jumped more than expected to 8.5 percent and
German retail sales fell unexpectedly in February, is likely to
heap more pressure on the ECB.
"Economic data from the euro zone has been very bad," said
Kathy Lien, director of currency research at GFT Forex in New
York. "Not only is the ECB expected to cut interest rates by 50
basis points, but there's a very strong chance that they'll
actually start to talk about alternative, non-standard
measures, which is credit easing or quantitative easing."
The ECB is expected to cut its benchmark interest rate to
1.0 percent on Thursday and markets are on alert for any sign
that officials are moving toward unorthodox measures such as
buying corporate or government debt to boost money supply.
In early afternoon trading in New York, the euro was
changing hands at $1.3203 <EUR=>, down 0.4 percent.
Major currencies moved in tight ranges as caution ahead of
the outcome of G20 and ECB meetings overshadowed a report
showing the United States shed another 742,000 private sector
jobs in March, which strategists said bodes ill for the
government's more comprehensive employment report on Friday.
"The jobs numbers are pretty bad, but people have settled
into accepting that reality," said UBS currency strategist
Brian Kim. "There's more concern with positioning ahead of the
G20 and ECB meetings."
UBS' Kim said any hint that the ECB intends to purchase
bonds, which would follow similar actions by other central
banks, would likely hurt the euro.
"That could be seen as the ECB playing catch-up and
acknowledging problems are worse than they'd let on," he said.
The dollar fell 0.2 percent to 98.67 yen <JPY=> while the
euro dropped 0.5 percent to 130.32 yen <EURJPY=>.
Earlier, the yen was hit by the Bank of Japan's tankan
corporate survey, which showed the index of manufacturers'
confidence falling at its fastest pace on record to an all-time
low. But the currency recovered, with some analysts saying
expectations for a deepening recession in the Japanese economy
have been mostly priced in.
Sterling rose 0.6 percent to $1.4404 <GBP=> after data
showed the rate of decline in Britain's manufacturing sector
eased by more than expected last month.
The dollar had earlier also found support after Bloomberg
News reported U.S. President Barack Obama was leaning toward
bankruptcy for General Motors and Chrysler, but retreated when
the White House said the report was "not accurate."
Uncertainty tends to attract safe-haven flows into the
dollar from higher-yield currencies and assets such as stocks.
(Additional reporting by Steven C. Johnson; Editing by
Chizu Nomiyama)
