* Dollar edges near 1-mth high vs euro before US payrolls
* Rate cut speculation batters Aussie, kiwi hits 10-month low
* Japan PM Fukuda to reshuffle cabinet, little impact seen
By Shinichi Saoshiro
TOKYO, Aug 1 (Reuters) - The dollar edged up towards a
one-month high against the euro on Friday before monthly U.S.
jobs data later in the day, with investors viewing the report as
a key hurdle for whether the U.S. currency can sustain its
rebound.
A mixed bag of U.S. data released the previous day showing
the economy expanding less than expected in the second quarter, a
spike in jobless claims but a pick-up in Midwest business
activity did not prove decisive for the dollar. []
Investors are still looking for the Federal Reserve to raise
interest rates later in the year, just as mounting signs of
economic slowdown from the euro zone to Australia have started to
take a toll on other major currencies.
"The dollar proved surprisingly resilient despite Thursday's
downbeat data," said Motonari Ogawa, director of forex trading at
Barclays Bank.
"No doubt the jobs data will generate a host of opinions, but
the market is likely waiting for a surprise -- whether it be on
the upside or downside -- as the next catalyst," said Ogawa.
In a Reuters poll, economists forecast that companies shed
75,000 workers in July in what would be the seventh straight
month of job losses.
The dollar fell 0.2 percent from late U.S. trade to 107.63
yen <JPY=> after hitting a one-month peak of 108.39 yen on
electronic trading platform EBS the previous day.
Japanese Prime Minister Yasuo Fukuda was overhauling his
cabinet on Friday in a bid to shore up his flagging popularity,
domestic media reported. But analysts said the reshuffle of top
officials should not have much impact on the yen. []
The euro fell 0.3 percent to $1.5559 <EUR=>, not far from a
one-month low of $1.5522 hit earlier this week and well off a
record peak of $1.6040 struck last month. Against the yen, the
euro fell 0.4 percent to 167.46 yen <EURJPY=R>.
Traders said the euro's weakness against the yen, with
selling emerging in Asia following the recent string of weak
European data, was weighing on the single European currency.
"The euro appears to be peaking out. The ECB hiked rates in
July and inflation still remains a threat, but indicators this
week did not show euro zone economic conditions in a positive
light," said Takahide Nagasaki, chief forex strategist at Daiwa
Securities SMBC.
Data this week showed euro zone economic sentiment hit its
lowest in over five years in July, pointing to a stagnant economy
and boosting expectations that interest rates will be kept on
hold this year with inflation still at a record high.
[]
Beyond the jobs data, market players were also keeping a
close eye on oil prices. The greenback recovered from its lows on
Thursday as crude oil prices <CLc1> fell back towards 12-week
lows and suffered their biggest monthly drop in nearly four years
in July.
RATE CUT SPECULATION HITS AUSSIE
Speculation over near-term interest rate cuts plagued the
Australian dollar on Friday.
Columnist Terry McCrann said the Reserve Bank of Australia
would use its post-meeting statement on Tuesday to set out the
case for lower interest rates, following two hikes earlier in the
year that lifted the cash rate to a 12-year peak of 7.25 percent.
[]
The Aussie dropped 0.6 percent to $0.9364 <AUD=D4> after
hitting a seven-week low of $0.9356. Traders said some hedge
funds were bailing out of long positions in the Aussie and kiwi.
The New Zealand dollar fell 0.9 percent to 10-month lows
around $0.7270 on deepening concerns over the local financial
sector after the country's largest fund manager said it was
suspending activity in one of its funds.[]
The kiwi has taken a hit since the Reserve Bank of New
Zealand cut rates last week and RBNZ Governor Alan Bollard
signalled this week that the central bank had "plenty of room"
for cutting rates further.
(Additional reporting by Satomi Noguchi; Editing by Michael
Watson)
