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Nonfarm payroll numbers due at 0830 ET are
expected to show gains of 240,000 jobs in December, extending
the longest run of job creation on record.
That would highlight the divergence of growth and monetary
policy prospects between the United States and the euro zone,
where more weaker-than-expected data added to speculation that
the European Central Bank is to embark on quantitative easing. <ECONEUROPE>
The dollar index, which tracks the greenback against a basket of
major currencies, edged down 0.3 percent ahead of the jobs
numbers <.DXY>, after hitting its highest in almost a decade on
Thursday.
"The day starts when the nonfarm payroll comes out. Nothing
matters before that," said David Bloom, global head of FX
strategy at HSBC in London.
"If we get a stronger-than-expected payrolls number the freight
train - the dollar - will just smash everything."
Numbers released on Friday by the euro zone's two biggest
economies, Germany and France, fueled speculation of a policy
move at the ECB's next meeting on Jan 22. Industrial output
declined in both countries and German exports fell sharply. <ECONEUROPE>
The euro edged away from a nine-year low of $1.1754 hit on
Thursday, trading at $1.1813 <EUR=>. That still left it close to
$1.1747, the psychologically important level at which it began
trading in January 1999.
Though the consensus view is that the U.S. economy will continue
to grow strongly in 2015, prompting the Fed to hike rates some
time in the middle of the year, some are worried that the United
States will not be able to escape the effects of weaker global
growth.
"Euro/dollar rates are telling us that investors are skeptical
of Fed normalization, skeptical on the U.S. recovery and
skeptical on decoupling," wrote Steven Englander, global head of
G10 FX strategy, in a note.
"Investors may feel that the U.S. economy is on borrowed time
and will ultimately succumb to slow growth elsewhere."
(Editing by Andrew Roche)
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