FOREX-Dollar firm, market awaits U.S. jobs report for Fed clues

* Dollar range-bound after holiday lull
* Euro weighed by slide in euro zone yields
* Aussie near 2-mth high as easing views shackle dollar,
euro
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds details and quotes, updates prices)
By Shinichi Saoshiro
TOKYO, July 5 (Reuters) - The dollar was firm on Friday but
traders held off on making big bets ahead of the closely-watched
U.S. non-farm jobs report that could influence the course of
near-term Federal Reserve policy.
The dollar index .DXY against a basket of six major
currencies stood little changed 96.748, having spent the
previous day in a tight range as the U.S. financial markets were
closed for the Independence Day holiday.
The index had fallen to a three-month trough of 95.843 last
week as U.S. Treasury yield slumped to 2-1/2-year lows on
expectations the Fed would cut interest rates this year,
starting as early as this month.
The focus was now on whether Friday's U.S. jobs report will
help make or break the case for a rate cut later in July.
Economists polled by Reuters are predicting U.S. non-farm
payrolls to have increased by 160,000 in June from 75,000 in
May.
"The dollar has been closely moving in correlation with U.S.
yields and today will be no exception, with the bond market's
reaction to the jobs report likely determining the direction of
currencies," said Yukio Ishizuki, senior currency strategist at
Daiwa Securities.
"The bond market rally may have gone too far so its reaction
to the jobs data could be volatile."
The dollar was flat at 107.850 yen JPY= . The greenback was
little changed on the week, during which it briefly touched a
two-week high of 108.535 when a U.S.-China trade truce boosted
risk appetite and weighed on the safe-haven yen.
The euro was steady at $1.1284 EUR= and headed for a
weekly loss of 0.75%. A drop in European government bond (EGB)
yields to record lows this week, in sympathy with the global
debt rally, has weighed on the single currency.
Germany's benchmark 10-year government bond yield
DE10YT=RR matched the European Central Bank's deposit rate of
minus 0.4% for the first time on Thursday, in the latest sign
that markets are braced for interest rate cuts soon.
"The bull flattening of the EGB yield curve needs to be
viewed with caution as it is not driven by weaker equities and
economic concerns, but rather by speculation," said Makoto Noji,
chief currency and foreign bond strategist at SMBC Nikko
Securities.
The bond market curve is said to "bull flatten" when the
decline in yields of longer-dated paper outstrips the fall in
shorter-dated rates - an occurrence usually seen as presaging
economic stress.
The Australian dollar AUD=D4 was flat at $0.7026 after
climbing to a two-month high of $0.7048 the previous day.
The Aussie has advanced 1.4% this week with expected rate
cuts from the Fed and the ECB helping shift some of the focus
away from the Reserve Bank of Australia's own easing bias.
The pound struggled near a two-week low of $1.2557 GBP=D4
plumbed on Wednesday.
As expectations for monetary easing from the world's central
banks have steadily increased, investors believe the Bank of
England might have to , which until recently had signalled its
next move would be to tighten, will not be able to resist the
pressure to ease.

(Editing by Shri Navaratnam)