FOREX-Dollar jumps as strong run of data turns all eyes to payrolls - Reuters

* Dollar hits 3wk top vs EUR, 8wk high on yen
* Volatility gauges jump ahead of U.S. non-farm payrolls
* Graphic: World FX rates tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, June 4 (Reuters) - The dollar was perched near
multi-week highs on Friday, basking in its biggest gains in
about a month after robust jobs data threw investors' focus on
to the strength of the U.S. recovery and on the possibility of
it driving policy tightening.
The next test comes later in the day when U.S. non-farm
payrolls data is published. The Street's consensus forecast is
for about 650,000 jobs to have been added in May, though the
"whisper number" among traders is higher, closer to 800,000.
Private payrolls - a bit of an unreliable guide - delivered
a big beat overnight with an increase of 978,000, against
forecasts of 650,000, which sent the dollar rallying.

It lifted 0.7% to a three-week high of $1.2118 per euro
and rose by the same margin to a two-month high of
110.32 yen. Gains topped 1% against the Aussie and the
kiwi, which fell from recent ranges to their lowest in weeks.
China's offshore yuan softened past 6.4 per dollar in
early Asia trade, while other moves were only slight as markets
now await the payrolls figures, due at 1230 GMT, with options
trade showing it is expected to trigger volatility.
"Clearly traders are covering dollar shorts into the jobs
data," said Chris Weston, head of research at brokerage
Pepperstone in Melbourne.
He reckons, as a rough guide, that a million or more jobs
might see the Aussie fall by another 1%, the euro drop about
0.8% and the dollar/yen exchange rate gain that amount as
traders factor in a policy response to the strong economy.
"Between 250k-500k jobs and we'll potentially see dollar/yen
fall 0.6% to 0.8%," Weston said. "A number in line will not give
us much to work with, so the moves in the market will be
dictated by the broad quality of factors – revisions to the
April print of 266k, the unemployment rate, hourly earnings."
At issue is whether the figure points to the sort of hiring
that could reel in pandemic job losses, lift wages and drive
broad U.S. growth that increases the trade deficit and weighs on
the dollar - or whether things feel like they are overheating.
Positioning data shows investors heavily short dollars,
leaving the market hypersensitive to any suggestion of a change
in direction for the currency or a shift in the rates outlook -
hence the options market is priced for a bumpy ride.
Overnight implied dollar/yen volatility shot up to a month
high above 8% on Thursday and euro/dollar implied
volatility hit its highest since mid-March.
Brian Daingerfield, head of G10 currency strategy at
Natwest, sees a payrolls print around 550,000 as the
"goldilocks" number: "strong enough to keep the recovery going
but not strong enough to pull tapering fears forward."
That could weaken the dollar broadly, he said, offsetting
Thursday's moves, while bonds could recover lost ground.
Benchmark ten-year U.S. Treasury yields rose 3.6 basis points to
1.6300% overnight and opened near that level in Tokyo on Friday.
The U.S. dollar index, which measures the greenback
against a basket of six major currencies, rose 0.7% on Thursday
to stand at a three-week high of 90.574 on Friday.
The Australian dollar was licking wounds at
$0.7652, after falling to its lowest since mid-April overnight,
while the kiwi was parked at $0.7136 after slipping to
its cheapest since early May on Thursday.
Sterling was steady at $1.4099 in Asia after
dropping through its 20-day moving average as the dollar
climbed. The yuan fell to 6.4014.
Cryptocurrencies held on to several days of gains to leave
bitcoin at $38,737 and on course for its best week in
a month.

========================================================
Currency bid prices at 101 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar $1.2128 $1.2127 +0.00% -0.74% +1.2132 +1.2115
Dollar/Yen 110.2100 110.2900 +0.00% +6.78% +110.3250 +0.0000
Euro/Yen <EURJPY=EB 133.66 133.74 -0.06% +5.31% +133.8100 +133.6200
S>
Dollar/Swiss 0.9037 0.9036 +0.04% +2.17% +0.9043 +0.9035
Sterling/Dollar 1.4105 1.4089 +0.10% +3.22% +1.4112 +1.4098
Dollar/Canadian 1.2113 1.2110 +0.04% -4.86% +1.2121 +1.2106
Aussie/Dollar 0.7659 0.7661 -0.02% -0.44% +0.7666 +0.7652
NZ 0.7144 0.7146 -0.03% -0.53% +0.7150 +0.7133
Dollar/Dollar All spots
Tokyo spots
Europe spots
Volatilities
Tokyo Forex market info from BOJ

(Reporting by Tom Westbrook.
Editing by Shri Navaratnam)

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