* Investors focus on Fed speeches for rate hints
* G8 leaders' comments on record high oil, dollar awaited
* Trade quiet before U.S. markets reopen after long weekend
By Rika Otsuka
TOKYO, July 7 (Reuters) - The dollar rose against the euro
and the yen on Monday after last week's job data suggested the
U.S. economy was not as sickly as some thought, with investors
now turning to comments from Federal Reserve officials this
week.
Trading was subdued before U.S. financial markets reopened
later on Monday after a holiday on Friday.
U.S. June payrolls fell for the sixth month in a row, but
the drop of 62,000 was in line with market expectations.
Traders had feared that a bigger fall would trigger a sell-off
in the dollar.
Instead, on Monday the dollar extended gains made last week
against the euro after the European Central Bank (ECB) cooled
speculation it might raise rates again soon.
Several Fed officials are slated to speak this week,
starting with San Francisco Fed President Janet Yellen later on
Monday.
Fed Chairman Ben Bernanke will speak at a Federal Deposit
Insurance Corp forum on Tuesday and before the House Financial
Services committee on Thursday, although his comments are
expected to stick to financial market regulation.
"The main theme in the market now is whether the Fed boosts
interest rates despite a weaker economy," said Hiroshi Yoshida,
a currency trader at Shinkin Central Bank. "If comments from
Bernanke do not support market expectations for rate
tightening, the dollar is likely to slide again."
Investors are looking to see how the Fed sees the balance
of risks between flagging U.S. economic growth and inflation.
Investors have started to take the view that risks to
growth and concern about the financial sector will prevent the
Fed from raising the fed funds rate from 2 percent for now.
However, markets are still pricing in a quarter-point rise
before the end of the year.
The euro <EUR=> fell 0.45 percent from late European trade
on Friday to $1.5632, its lowest level in more than a week.
The ECB raised rates on Thursday to 4.25 percent from 4
percent, as widely expected, to bring record euro zone
inflation under control, but ECB President Jean-Claude Trichet
said he had "no bias" on monetary policy, dampening some
expectations that the central bank would continue to raise
rates.
The dollar rose 0.45 percent against the Japanese currency
to 107.31 yen <JPY=>, its highest level in just over a week.
Talk of hefty euro zone bond redemptions this week weighed
on the euro against the yen earlier in the day. Euro bond
coupon payments and maturities this week total 43 billion euros
compared with 15 billion euro of expected new supply.
The euro was little changed at 167.72 yen <EURJPY=R>,
recovering from losses as the Nikkei stock average rose nearly
1 percent.
The dollar was firm against a basket of major currencies
<.DXY>, rising to its highest level in more than a week.
G8 STARTS
Traders are also focusing on a three-day meeting of leaders
of the Group of Eight rich countries to see if they will send a
message strong enough to reverse the course of record high oil
prices and the dollar's long-term slide.
Climate change, along with soaring food and oil prices, are
expected to dominate the agenda of the meeting, which starts in
Hokkaido, northern Japan, on Monday. []
"Top government officials around the world are now showing
their stance of fighting surging oil and commodities prices,"
said Osamu Takashima, chief currency analyst at Bank of
Tokyo-Mitsubishi UFJ.
"Oil and commodities might peak out soon and the euro and
currencies of commodity-producing countries are likely to slide
in the next six months or so," Takashima said.
The euro has tended to go up when oil rises due to
speculation that oil-producing countries may use the increased
dollar-denominated windfall from crude exports to buy euros and
other currencies to diversify their portfolios.
U.S. President George W. Bush said on Sunday his
administration supported a strong dollar policy. []
The market showed little reaction as such a strong-dollar
mantra is sounding rather hollow in light of easing
expectations of an aggressive policy tightening later this
year, analysts said.
(Additional reporting by Chikako Mogi; Editing by Alan
Raybould)
