* Dollar supported by higher benchmark U.S. Treasury yields
* Bond yields jump on U.S. private-sector jobs report
* ECB policy announcement due later in the day
* Investors focus on Friday's non-farm payrolls
By Yuzuha Oka
TOKYO, March 9 The dollar stood tall on higher
U.S. Treasury yields on Thursday, after a surge in U.S.
private-sector jobs in February cemented expectations the
Federal Reserve will raise rates next week.
The dollar index, which measures the greenback against six
major peers, was last up 0.1 percent at 102.13, not far
from a March 2 peak of 102.26, which was a level not seen since
The ADP National Employment Report showed on Wednesday that
private payrolls grew by 298,000 jobs last month, the largest
increase since December 2015. The gain was well above
economists' expectations for a 190,000 increase.
The ADP figures come ahead of the U.S. Labor Department's
more comprehensive non-farm payrolls report on Friday, which
includes both public- and private-sector employment.
Traders have now priced in around a 90 percent possibility
that the Fed will raise interest rates this month, up from
around a 30 percent chance early last week, according to CME
Group's FedWatch tool. Hawkish comments from a string of Fed
officials, including Chair Janet Yellen, have boosted bets for a
The strong gain in private-sector jobs pushed benchmark U.S.
Treasury yields to their highest since December.
The 10-year U.S. Treasury note yield hit 2.583 percent
, a level last seen on Dec. 20. It last stood at
2.563 percent. Yields on two-year Treasury notes also
climbed to 1.378 percent on Wednesday, the highest since August
The dollar was last up 0.1 percent at 114.41 yen. The
greenback was helped by widening U.S.-Japan interest rate
differentials. It had risen as high as 114.75 yen on Wednesday,
not far from a two-week high of 114.955 touched on Feb. 15.
However, investors were cautious ahead of Friday's non-farm
payrolls as the ADP figures have proven a poor indicator for the
awaited jobs report by the government, which is favoured by the
"After a change in ADP's methodology in October, its figures
have become closer to the government's data. So we could expect
an upbeat figure on Friday," said Junya Tanase, chief currency
strategist at JP Morgan Chase Bank.
"However, investors have already priced in February's strong
job growth, so it is less likely that the U.S. Treasury yields
jump once more and the dollar rallies unless the data is very
strong," added Tanase.
The euro last stood at $1.0537, wallowing near a
one-week low of $1.0533.
Investors are awaiting the outcome of the European Central
Bank's March meeting later on Thursday. The ECB is expected to
keep its ultra-loose monetary policy on hold despite rising
However, some analysts have warned the central bank may
sound unexpectedly hawkish.
"As economic growth and inflation are picking up, our
economists predict the ECB to be hawkish and start policy
tightening preparation as early as April," said Osamu Takashima,
chief FX strategist at Citigroup Global markets Japan.
"Markets have not priced in a hawkish ECB yet, so if this
happens European bond yields would jump and prompt the euro to
outperform," added Takashima.
The ECB has been casting a cautious eye towards upcoming
elections in the Netherlands and France during an upsurge in
populist, anti-establishment sentiment.
On Wednesday, growing worries that France's far-right leader
Marine Le Pen may stage a surprise win pushed up the cost of
hedging against volatility in the safe-haven Swiss franc versus
the euro in the coming two months to its highest level since
Although polls suggest Le Pen could lose the May 7 second
round elections to current favourite Emmanuel Macron or Francois
Fillon, last year's unexpected votes for Brexit and Donald Trump
have left investors wary of surprises.
(Editing by Kim Coghill and Jacqueline Wong)