Thursday July 2, 11:44 AM
Dollar rises before ECB rate call, US jobs report
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LONDON (AFP) - The dollar climbed Thursday against the euro and yen ahead of a eurozone interest rate decision and a report that is expected to show another wave of job losses in the United States, dealers said.
In late morning trading here, the European single currency fell to 1.4089 dollars from 1.4146 dollars in New York late on Wednesday. US financial markets will be closed on Friday for Independence Day.
Against the Japanese currency, the dollar gained to 96.68 yen from 96.64 yen on Wednesday.
The European Central Bank was expected to hold the bloc's main interest rate steady at an all-time low level of 1.0 percent until the effects of unprecedented action to boost lending take hold. A decision is due at 1145 GMT.
"The ECB is highly unlikely to offer anything by way of surprises at this meeting in terms of their conventional monetary policy," said Calyon analyst David Keeble.
Ahead of the decision, the EU said the unemployment rate in the 16 countries using the euro climbed to a 10-year high of 9.5 percent in May.
Investors are also bracing themselves for a US non-farm payrolls report due later Thursday, said NAB Capital strategist Spiros Papadopoulos.
A disappointing result "would help reinforce last week's Fed message that rates aren't going up for a long while yet," he added.
The US private sector shed 473,000 jobs in June, a survey by payrolls firm ADP (Paris: FR0010340141 - news) showed Wednesday, highlighting ongoing weakness in the labour market.
The figures sparked concern that the non-farm payrolls report may be worse than market expectations for 365,000 job losses in June, dealers said.
The US Federal Reserve last week left its stimulative monetary policy unchanged and gave no sign that it was preparing to scale back its pump-priming measures.
In Europe, ECB policymakers met Thursday in Luxembourg as deflation clouds rolled over the recession-hit 16-nation eurozone.
Eurozone consumer prices fell in June for the first time since the European Monetary Union was formed, with a provisional inflation figure of minus 0.1 percent that was far below the central bank target of just under 2.0 percent.
With the economy floundering in recession, the ECB has launched an enormous life raft, lending banks 442 billion euros (626 billion dollars) for a year at 1.0 percent, the most it has ever provided at one time.
It was the central bank's first 12-month refinancing operation, and drew an all-time high of more than 1,100 commercial banks.
In trading here on Thursday, the euro was changing hands at 1.4089 dollars against 1.4146 dollars late on Wednesday, 136.26 yen (136.71), 0.8622 pounds (0.8581) and 1.5230 Swiss francs (1.5204).
The dollar stood at 96.68 yen (96.64) and 1.0805 Swiss francs (1.0744).
The pound was at 1.6348 dollars (1.6483).
On the London Bullion Market, the price of gold eased to 936.52 dollars an ounce from 938.25 dollars an ounce late on Wednesday.
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