LONDON (MarketWatch) -- The dollar held its ground versus major rivals Friday as traders awaited the September U.S. jobs report.
The longest stretch of job losses since the 1930s probably continued last month, economists say. A MarketWatch survey found economists on average expect U.S. nonfarm payrolls to have declined by 167,000 in September to about 131 million, marking the 21st consecutive month of falling employment. See full U.S. jobs report preview.
Analysts, however, said the market appears to have factored in a larger decline. That means a number that shows a larger-than-expected fall could still trigger a modest relief rally, putting added pressure on the dollar as yield-seeking investors seek other assets.
A corrective bounce by the dollar, however, can't be ruled out, wrote strategists at BNP Paribas, who said they would view such moves as an opportunity to sell the greenback.
Meanwhile, U.S. stock index futures were lower, following on losses in Asia and a weaker tone in Europe. See Indications.
The dollar index (DXY 77.24, +0.05, +0.06%) , a measure of the greenback versus a trade-weighted basket of currencies, changed hands at 77.250, up slightly from 77.179 in North American trade late Thursday afternoon.
The dollar bought 89.34 yen, down from 89.70 yen in late U.S. trading Thursday.
The euro fetched $1.4537, little changed from $1.4533, while the British pound slipped to $1.5849, down from $1.5947 Thursday.
Nervousness over global economic prospects left commodity currencies on the defensive, with the Australian dollar slipping 1% against the greenback to trade at 86.25 U.S. cents. The U.S. dollar rose 0.3% versus the New Zealand dollar to change hands at NZ$1.4023.
The BNP Paribas strategists said the euro would likely maintain a soft tone as markets await the results of Ireland's referendum on the European Union treaty. Ireland forcefully voted against the agreement, which is designed to streamline the 27-nation bloc's decision-making apparatus, in June 2008.
Polls indicate approval is likely, but traders fear that defeat could trigger a flight out of Irish government bonds and other assets. See full story.
Also, remarks this week by European Central Bank President Jean-Claude Trichet and E.U. Economic and Monetary Affairs Commissioner Joaquin Almunia warning against excessive volatility in currency markets could make for range-bound action ahead of the weekend meeting of Group of Seven officials, said strategists at UniCredit MIB in Milan.
Sterling found little lasting support from data showing U.K. house prices rose 0.9% in September, bringing the average price in line with the year-ago figure. At the same time, data showed a further drop in activity in the U.K. construction sector.
Against the Japanese currency, the euro bought 129.30 yen, down from 130.18 yen late Friday.
Some analysts said that the euro would was poised for a break lower against the Japanese unit, comparing it to the situation the pound faced last week. Read more on the pound.
"Judging from the Wednesday data from Tokyo Financial Exchange, we estimate that euro/yen long position held by Japanese retail FX margin traders increased to 3.2 billion euros on Sept. 30 from 2.5 billion euros the previous day," said Tohru Sasaki, chief Japan forex strategist for JP Morgan Chase Bank.
"This is almost the same level as early-July and mid-April, just before euro/yen declined relatively sharply," he said in a research note Friday.
The euro's 200-day moving average is at 129.60 yen, which is just below its current level, he said. If euro/yen is destined for a similar trend as the pound/yen last week, "we are likely to see relatively large decline in euro/yen soon," he said.
