Dollar holds near highs after US jobs data

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The dollar hovered around 10-month highs ahead of U.S. jobs data on Friday, the end of a third strong week which has hinted at an end to a year of chronically low volatility, low volumes and low trading returns.

Dollar bulls took a breather going into one of the most-watched piece of economic data, U.S. nonfarm payrolls.Although the data fell short of expectations, the greenback held near its peaks.

The dollar index was up marginally near 81.50, within view of a 10-1/2 month peak of 81.573. It has gained just over 2 percent so far this month.

The euro was flat near $1.34. It has fallen six full cents since early May, but proved more resilient on Thursday to another batch of upbeat U.S. data, which briefly sent U.S. Treasury yields to more than 2.6 percent. Against the , the dollar gained marginally near 103 yen, also just below a four-month high of 103.15 yen struck on Wednesday.


Traders and investors have been pondering whether this is the beginning of a lasting uptrend, one that has frustrated dollar bulls for much of this year, or another false start.

The signs from options markets are positive but still extremely cautious. Volatility as measured by 3-month options contracts has risen steadily from record lows but remains at very low levels around 5.4. Currency platform and trading chiefs say they need volatility of a minimum of around 7-8.

A Reuters survey of economists showed payrolls, due at 830, probably increased by 233,000 in July. While that would be less than June's hefty increase of 288,000 jobs, it would still represent a sixth straight month that employment has expanded by more than 200,000, a stretch not seen since 1997.

--By Reuters. For more information on foreign exchange, please click here.