* Dollar index flat ahead of payrolls report
* Swedish crown hits 1-year low after run of weak data
* Euro hits five-week high vs yen
By Jemima Kelly
LONDON, Sept 2 The dollar held steady on Friday
as investors awaited the currency market's most closely watched
data set of the month, the U.S. non-farm payrolls report, for
clues as to whether U.S. interest rates will rise this year.
The dollar was flat against a basket of major currencies
, having fallen 0.4 percent on Thursday - its worst
performance in two weeks - after a surprise contraction in U.S.
manufacturing cast some doubts on the strength of economic
The result was a setback for dollar bulls, who had bet solid
U.S. data this week would cement the case for a Federal Reserve
rate hike, possibly as soon as September.
The U.S. labour market data due at 1230 GMT is expected to
show employers added 180,000 jobs in August, according to the
median estimate of 91 economists polled by Reuters. That would
keep alive the view that U.S. interest rates will increase by
the end of the year.
Markets are pricing in a less than 1 in 4 chance of a
tightening at the Fed's next meeting on Sept 21-22. A hike by
the end of the year is around 55 percent priced in, up from less
than 50 percent before Fed officials signalled last week at a
meeting of central bankers that a 2016 hike was possible.
"We've done some travelling (in rate expectations)... so I
can see the dollar trundling higher on today's data," said Kit
Juckes, macro strategist at Societe Generale in London. "It
would take quite a lot for the market to suddenly decide that
they're going to go... twice by the end of the year."
The Swedish crown hit a one-year low of 9.6210 crowns per
euro after a run of weak economic data fanned fears
of a steeper-than-expected economic slowdown and that the
central bank will delay planned interest rate hikes.
Some analysts said that news that the world's biggest
company, Apple, would repatriate billions of dollars of global
profits to the United States next year would lend support to the
dollar at the margins.
But Commerzbank currency strategist Thu Lan Nguyen, in
Frankfurt, was sceptical.
"Yes, if they move a large amount ...but all in all I'm very
doubtful that a single corporation is able to sustainably move
an exchange rate such as the U.S. dollar," she said.
The greenback rose 0.3 percent to 103.50 yen, close
to the five-week high of 104 yen hit on Thursday. The euro hit a
five-week high against the Japanese currency, of 116.05 yen
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Hideyuki Sano in Tokyo; Editing by
Angus MacSwan and John Stonestreet)