* Dollar supported by stronger U.S. employment data
* Higher Treasury yields helping greenback
* U.S. jobs data on Friday expected to set dlr's direction
By Kaori Kaneko
TOKYO, Jan 6 (Reuters) - The dollar held steady against the
yen and the euro on Thursday, maintaining overnight gains, and
could strengthen more after strong private employment data lifted
expectations for Friday's U.S. payrolls number.
The greenback took a breather against the yen after rallying
1.5 percent on Wednesday for its biggest one-day rise in more
than three months, as dollar selling by Japanese exporters
tempered the rally.
The euro eased slightly to $1.3141 <EUR=>, hovering near
trendline support at $1.3110, with another possible downside
target lurking at $1.3081, the euro's 200-day moving average.
The U.S. ADP report showed a record 297,000 private-sector
jobs were created in December, reinforcing views that the country
is on a steady path to recovery and sending U.S. Treasury yields
higher across the curve, which gave a lift to the dollar. []
Adding evidence of economic recovery, a separate report
showed the U.S. services sector expanded in December.
"The market is still bid for dollars," said Akira Hoshino,
chief manager at Bank of Tokyo-Mitsubishi UFJ in Tokyo.
"If the key jobs data shows a jobs gain of 250,000 to 300,000
and the unemployment rate drops, it would further boost yields
and support the dollar," Hoshino said.
The U.S. nonfarm payrolls data due on Friday is expected to
show overall gains of 175,000 jobs for December. The forecast was
revised higher from 140,000 in the wake of the ADP data.
[]
"In terms of economic fundamentals, the U.S. is doing
relatively well. It is not doing too badly and is better off than
other countries," said Kimihiko Tomita, head of foreign exchange
at State Street Global Markets in Tokyo.
"Everybody is happy for now to hop on the bus, which seems
headed toward dollar strength," Tomita said.
The U.S. policy mix of quantitative monetary easing, together
with an $858 billion package including renewed tax cuts that was
adopted in December, is supporting the U.S. economy and is
positive for the dollar, Tomita said.
But given that employment data is a lagging indicator, a
significant improvement in employment figures would likely only
emerge towards the latter half of this year, he said.
JAPAN EXPORTERS
A trader for a Japanese brokerage house said that if Friday's
jobs data shows an increase of around 300,000 jobs, that could
open the way for an eventual dollar rise to 86 to 87 yen.
The dollar index, which measures the greenback's value
against a basket of major currencies, stood firm at 80.274 <=USD>
<.DXY>, a sharp turnaround from last week's 78.775 trough.
The dollar stood at 83.20 yen <JPY=>, holding steady compared
with late U.S. trade on Wednesday after pulling up from an
eight-week low of 80.93 yen hit on trading platform EBS earlier
this week.
Traders cited dollar-selling by Japanese exporters at levels
above 83.20 yen, while short-term players were said to be picking
up the greenback on dips.
The euro, which has traded mostly between $1.30 and $1.34
since December, stayed under pressure on nagging worries about
debt problems in certain euro zone nations.
"There are still negative factors around for the euro but
they are probably not fresh ones that would change the currency's
trend. The market is still watching how the euro zone's debt
problems will pan out," said Ayako Sera, market strategist at
Sumitomo Trust and Banking.
The Australian dollar traded below parity and fell 0.2
percent to $0.9974 <AUD=D4>.
In addition to the latest batch of upbeat U.S. economic data,
worries about widespread floods in the Australian state of
Queensland, which produces two-fifths of the world's coking coal,
Australia's top export, provided another excuse to take profits
on the Aussie.
(Additional reporting by Wayne Cole in Sydney and Masayuki
Kitano and Reuters FX analyst Rick Lloyd in Singapore; Editing by
Joseph Radford)
