* Dollar index holds steady at 77.996 <.DXY>
* U.S. Dec non-farm payrolls seen unchanged from prvs month
* Japan finmin tones down but weak yen bias seen intact
* Dollar helped on regulators' warning banks on rate risks
(Adds quote, updates prices)
By Tamawa Desai
LONDON, Jan 8 (Reuters) - The dollar was well-supported on
Friday on expectations for an upbeat U.S. payroll figure which
would point to an improving economy and possibly hasten U.S.
interest rate tightening speculation.
The greenback also received help from U.S. regulators urging
banks to protect themselves against hikes in interest rates
[], and as Kansas City Federal Reserve Bank
President Thomas Hoenig said the Fed should act sooner rather
than later to contain inflation pressures. []
St. Louis Fed president James Bullard said on Friday
uncertainty about inflation was mounting but price pressures
remained subdued. He also said more improvement in the U.S. jobs
market was needed before exiting some stimulus programmes.
[]
"A positive figure (for payrolls) would check the box of the
Fed needing to see rising employment before hiking," said Chris
Turner, currency strategist at ING. A positive reading would be
the first in two years.
A sustained dollar rally would depend on how far U.S. bond
yields gain after the data, analysts added. Two-year Treasury
notes were last yielding 1.06 percent.
Economists in a Reuters poll forecast non-farm payrolls to
remain unchanged from the previous month, ranging from a 80,000
loss to a 100,000 gain. Forecasts were for a 8,000 loss in a
Reuters poll last week.
"The dollar could see some setback on a weaker reading, but
that would just be a good opportunity to buy dollars," said Lee
Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.
The Labor Department will release the non-farm payrolls data
on Friday at 1330 GMT. [] U.S. President Barack
Obama is set to make a statement on the economy at 1940 GMT.
The dollar index, which tracks the performance of the
greenback versus a basket of six other major currencies, was up
0.1 percent on the day at 77.996 <.DXY>.
By 1142 GMT, the euro was flat from late U.S. trade at
$1.4302 <EUR=>. Reaction was limited to data showing the euro
zone economy shrank a revised -4.0 percent on year from a
previous estimate of -4.1 percent. []
Separate data showed euro zone unemployment hitting 10.0
percent in November. []
WEAK YEN BIAS UNCHANGED
The dollar was down 0.1 percent at 93.20 yen <JPY=> after
rising as high as 93.78 yen on trading platform EBS, its
strongest level since late August.
The dollar edged down from 4-month highs against the yen
after new Japanese Finance Minister Naoto Kan said on Friday
that markets should decide currency levels, toning down his
earlier call for a weaker yen. []
Kan said on Thursday many Japanese firms were in favour of
dollar/yen around 95 yen.
Many market players still see Kan favouring a weaker yen in
contrast to his predecessor Hirohisa Fujii, who was perceived as
more tolerant of a stronger Japanese currency.
"There is no change to the present finance minister's bias
for a weaker yen," said Masafumi Yamamoto, chief foreign
exchange strategist in Japan for Barclays Capital. "The chances
of intervention in cases where the yen truly rises has increased
considerably compared to when Fujii was finance minister."
The euro dipped 0.2 percent to 133.28 yen <EURJPY=R>, having
hit a one-month high at 134.12 yen in early Asian trade.
(Editing by Mike Peacock and Toby Chopra)
