FOREX-Dollar steadies after U.S. jobs report, focus shifts to ECB meeting

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Eimi Yamamitsu
TOKYO, Sept 7 (Reuters) - The dollar steadied in
holiday-thinned trade on Monday after U.S. jobs data showed job
growth slowed further in August, while traders shifted their
focus to the European Central Bank's meeting on Thursday.
The U.S. Labour Department report on Friday showed that U.S.
employment growth slowed and permanent job losses increased as
government funding started running out, raising doubts on the
sustainability of the economy's recovery. Still, the jobless
rate fell to 8.4% from 10.2% in July. In the immediate aftermath, the greenback rallied to its
highest in a week at 93.242 against a basket of six major
currencies on safe-haven buying, but later retraced its gains as
U.S. stock indexes recovered.
The dollar index =USD was little changed on Monday at
92.846. Foreign exchange trading was likely to be subdued as
U.S. financial markets are closed for the Labour Day holiday.
"The jobs data which showed a decline in the unemployment
rate, and a rise in U.S. Treasury yields, are supporting the
dollar today," said Masafumi Yamamito, chief currency strategist
at Mizuho Securities.
"However, what's weighing on the currency is a huge drop in
U.S. stocks (last week)."
The S&P 500 fell 2.3% last week after five consecutive weeks
of gains. .N
Broader sentiment on the dollar remains weak after Federal
Reserve Chair Jerome Powell reiterated on Friday that the
central bank plans to keep U.S. rates lower for longer.
"We think that the economy's going to need low interest
rates, which support economic activity, for an extended period
of time ... it will be measured in years," Powell said.

The focus this week will be on European Central Bank's
policy decision on Thursday. Most analysts don't expect a change
in policy stance but are focusing on the message the ECB will
deliver on its inflation forecasts.
The ECB meeting comes after the euro marked a two-year high
at the beginning of the month.
The common currency, however, quickly retraced after
executive board member Philip Lane said last week that the
appreciation of the euro "does matter" for monetary policy,
highlighting the potential for further easing from the bank.
The euro EUR=EBS stood at $1.18395 on Monday.
The British pound GBP=D3 fell 0.2% to $1.3253, retreating
from its highest level in almost a year on fears over a no-deal
Brexit.
Amid an EU-UK trade negotiations impasse, the chances of a
no-deal Brexit have risen sharply as negotiations have been
threatened by Britain's insistence that it have full autonomy
over its state aid plans. The European Union is demanding a potential veto on
Britain's post-Brexit laws and regulations, the British daily
The Times reported on Saturday, citing senior government
officials. Against the yen JPY=EBS , the dollar traded at 106.37.
On the data front, the United States has producer prices on
Wednesday and consumer price data on Friday, while China's
consumer prices will be released on Wednesday.
The yuan CNH=EBS was little changed in offshore trade on
Monday morning, and last traded at 6.8345 per dollar.
Among the Antipodean currencies, the Australian dollar
AUD=D3 edged higher to $0.72895, while the New Zealand dollar
NZD=D3 last traded at $0.6711.
Elsewhere, the Canadian dollar CAD=D3 changed hands at
C$1.3076. The Bank of Canada is also due to make an interest
rate announcement on Wednesday.