Dollar up against euro before US jobs data

LONDON (AFP) - The dollar rose against the euro but remained under pressure on concerns over the outlook for the slowing US economy before the release of key US jobs data later in the day, dealers said Friday.

In late morning European trade, the euro fell to 1.4708 dollars from 1.4746 dollars in New York late on Thursday.

The dollar climbed to 109.34 yen from 109.30 yen late Thursday.

Gold, which is benefiting from a weak dollar because it makes the dollar-denominated commodity cheaper for buyers using stronger currencies, stood at 859.35 dollars per ounce after striking a record high 868.89 dollars Thursday.

Crude prices traded under 99 dollars in New York after their record run up above 100 dollars on Thursday.

"The release of US non-farm payrolls (figures) will dominate today," said ABN Amro economist Melinda Smith.

Wall Street analysts expect the report to show 70,000 new jobs were created last month after 94,000 in November, below the number needed to absorb new labour market entrants.

"A reading of above 94,000 should be supportive for the dollar but if the reading comes in below 70,000 this would add to the (US Federal Reserve's) dilemma of whether further aggressive rate cuts are warranted," Smith said.

Dealers said weaker-than-expected US jobs data would increase pressure on the US central bank to lower interest rates again later this month to prevent the US economy from stalling further.

The figures will be "closely watched for any sign of further significant weakening, potentially requiring more aggressive Fed action," NAB Capital currency strategist John Kyriakopoulos wrote in a note to clients.

The market now expects that the Fed to its key interest rate to 3.5 percent by mid-2008, from the current level of 4.25 percent, he noted.

The Fed has cut rates three times back-to-back since September 2007 to try to cushion the US economy from a housing slump and related credit crunch.

In European trading on Friday, the euro changed hands at 1.4708 dollars against 1.4746 late Thursday, at 160.82 yen (161.18), 0.7440 pounds (0.7480) and 1.6374 Swiss francs (1.6384).

The dollar stood at 109.34 yen (109.30) and 1.1134 Swiss francs (1.1110).

The pound was at 1.9767 dollars (1.9713).

In London, the price of gold rose to 859.35 dollars per ounce from 858.85 dollars late on Thursday.