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FOREX-Dollar steady after U.S. data, euro rises with bond yields
October 5, 2016 / 3:52 PM / in a year

FOREX-Dollar steady after U.S. data, euro rises with bond yields

* Dollar index firm after U.S. services, private jobs data
    * Euro zone bond yields up following report on ECB bond
    * Sterling rebounds after falling to 31-year low below $1.27

 (Updates market action, changes byline, dateline, previous
    By Richard Leong
    NEW YORK, Oct 5 (Reuters) - The dollar was little changed
against a basket of currencies on Wednesday as upbeat data on
U.S. services sector offset a weaker-than-expected report on
private job growth, while the euro was broadly higher in step
with a rise in higher euro zone bond yields.
    U.S. services industries grew at their fastest pace in 11
months in September, reinforcing the view of a steady economic
expansion which would allow the Federal Reserve to raise
interest rates later this year, analysts said. 
    Wednesday's encouraging snapshot of the services sector from
the Institute for Supply Management followed perceived hawkish
remarks from regional Fed presidents Loretta Mester and Jeffrey
Lacker earlier this week.  
    "This is adding to the view that December is the most likely
rate-hike scenario for the Fed," said Omer Esiner, chief market
strategist at Commonwealth Foreign Exchange Inc. in Washington.
    The latest ISM services data offset a weaker-than-expected
jobs reading from ADP. The payroll processor said on Wednesday
U.S. companies added 154,000 workers in September, the fewest
since April. 
    The greenback's gains were also limited as traders remained
cautious ahead of the government's payrolls report due at 8:30
a.m. (1230 GMT) on Friday. 
    The dollar index was unchanged at 96.172 after rising
to 96.442 on Tuesday, its highest since Aug. 9.
    The greenback clung near a four-week peak against the yen.
It was last up 0.55 percent at 103.42 yen. 
    The euro soared to a five-year high versus the struggling
pound and reached a three-week high against the yen.
    Most euro zone bond yields rose to two-week highs, a day
after a Bloomberg article cited sources as saying the European
Central Bank would probably wind down its bond buying gradually
before ending quantitative easing. 
    An ECB media officer said in a tweet later on Tuesday that
the ECB had not discussed reducing the pace of its monthly bond
    Still, regional bond yields rose with the two-year German
Schatz yields at -0.678 percent after hitting its
least negative level in 1-1/2 weeks. 
    The euro rose to 88.43 British pence, a level
last seen five years ago before retreating to 87.80 pence in
U.S. trading. 
    The euro zone common currency rose 0.6 percent to 115.90 yen
after touching its highest in three weeks, while it was little
changed versus the dollar at $1.1207.  
    "The headlines that the ECB is considering tapering has led
to some buying in the euro, especially against the yen," said
Yujiro Goto, currency strategist at Nomura.
    Sterling rose 0.2 percent to $1.2755 after falling earlier
Wednesday below $1.27 for the first time in over three
decades on worries that Britain's separation from the European
Union could be rocky and have adverse economic consequences. 
    Currency bid prices at 11:42AM (1542 GMT)
 Description  Last           U.S. Close  Pct Change  YTD Pct
                              Previous                Change
 Euro/Dollar  $1.1201        $1.1202     -0.01%      +3.14%
 Dollar/Yen   103.5200       102.8800    +0.62%      -14.08%
 Euro/Yen     115.94         115.23      +0.62%      -12.00%
 Dollar/Swis  0.9766         0.9783      -0.17%      -2.52%
 Sterling/Do  1.2751         1.2726      +0.20%      -13.48%
 Dollar/Cana  1.3186         1.3191      -0.04%      -4.72%
 Australian/  0.7617         0.7619      -0.03%      +4.70%
 Euro/Swiss   1.0937         1.0969      -0.29%      +0.47%
 Euro/Sterli  0.8782         0.8799      -0.19%      +19.21%
 NZ           0.7171         0.7208      -0.51%      +5.07%
 Dollar/Norw  8.0332         8.0073      +0.32%      -9.12%
 Euro/Norway  8.9973         8.9723      +0.28%      -6.29%
 Dollar/Swed  8.5961         8.5997      -0.05%      +2.21%
 Euro/Sweden  9.6290         9.6341      -0.05%      +4.63%

 (Additional reporting by Anirban Nag in London and Shinichi
Saoshiro in Tokyo; Editing by Catherine Evans and James

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