FOREX-Euro-dollar steadies as rally pauses ahead of ECB meeting

* Traders awaits Thursday's ECB meeting
* Euro steadies after backing off 2-1/2 year high
* Sterling drops on threat to EU divorce deal
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tommy Wilkes
LONDON, Sept 7 (Reuters) - The euro-dollar exchange rate
steadied above $1.18 on Monday as traders took stock of the
latest U.S. jobs data and prepared for the European Central Bank
meeting on Thursday to see if policymakers will introduce yet
more stimulus.
The dollar has tumbled to more than two-year lows against
the euro at the start of September as investors fretted about
the strength of a U.S. economic recovery and bet U.S. interest
rates would stay low for longer just as policymakers had
introduced a significant recovery fund in Europe.
But the greenback has steadied in recent sessions,
especially after the euro's brief flirtation with the $1.20
level was followed by selling of the single currency.
U.S. jobs data on Friday has helped the dollar. The U.S.
Labour Department report showed that U.S. employment growth
slowed and permanent job losses increased as government funding
started running out. Still, the jobless rate fell to 8.4% from
10.2% in July. "The U.S. dollar has found a firmer footing lately, though
the bounce remains tentative," Alvin Tan, an FX Strategist at
RBC Capital Markets, said.
"Jawboning by ECB officials worried about the euro's rise
has helped calm fevered USD bearishness."
Investors are not expecting any policy changes at Thursday's
ECB meeting but will be listening closely for anything said
about the euro after a blistering rally that has likely unnerved
some policymakers.
In a quiet start to the trading day on Monday, the euro last
stood at $1.1841 EUR=EBS , unchanged on the day, while the
dollar index =USD was little changed at 92.875.
U.S. financial markets are closed for the Labour Day holiday
so trading volumes are likely to be thinner than usual.
Analysts said a sharp decline in U.S. stocks last week also
prompted traders to adjust their positions on the dollar.
"When stocks become unstable, the yen appreciates. What
happens as a result is that a stronger dollar and yen bump into
each other, meaning other currencies could weaken," said Minori
Uchida, chief currency analyst at MUFG Bank.
Elsewhere, the big mover was sterling, which slid 0.5% after
Britain reportedly threatened to override its European Union
divorce deal. The currency weakened 0.5% $1.3218 GBP=D3 while
against the euro it touched a one-week low of 89.605 pence
EURGBP=D3 .
Against the yen JPY=EBS , the dollar traded at 106.19, down
marginally on the day.
The Chinese offshore yuan CNH=EBS was little changed and
last fetched 6.8334 per dollar after customs data on Monday
indicated that the country's exports marked the strongest gain
since March 2019 while imports slumped.