* Sterling rises to near five-year high
* U.S. monthly jobs data due Friday
(Recasts with New York prices and comment; changes byline and
dateline; previous LONDON)
By Michael Connor
NEW YORK, May 1 The dollar dipped on Thursday
against the euro and the pound, which reached a nearly five-year
high against the greenback after unexpectedly robust
manufacturing data bolstered optimism about Britain's economy.
The dollar had fallen broadly on Wednesday on strikingly
soft U.S. growth data, but was up on Thursday against the
Japanese yen and other currencies. The dollar index
, which declined Wednesday, was ahead 0.06 percent in New
Global currency volumes were thinned by holidays in Europe
and Asia as traders awaited Friday's monthly reports on U.S.
"Currency traders seem to be looking forward to the U.S.
employment report tomorrow. Volatility remains at very low
levels," said Greg Michalowski, chief currency analyst at FXDD.
Traders reacted little to U.S. Federal Reserve policymakers,
who blamed much of the first quarter's weak growth on harsh U.S.
weather, but will scour the April employment report on Friday
for hints about the U.S. economy, Michalowski said.
"With the employment report being the first for the second
quarter, I think they will be more interested in what it has to
say," Michalowski said. "Perhaps it will also help wake up
In late-morning New York trade, the euro was at
$1.3871, up 0.04 percent for the day.
The pound was worth $1.6884, a gain of 0.08 percent,
after rising to an almost five-year high of $1.6921. Against the
yen, the dollar was up 0.1 percent at 102.34 yen.
Sterling has gained around 10 percent against a
trade-weighted basket of currencies in the past 12 months but
has struggled to make progress since mid-February as many
players judged the best news on the economy had been priced in.
There are growing doubts over whether inflation, investment
and underlying demand in the economy will be strong enough to
force the Bank of England to raise interest rates early next
year, as market pricing suggests.
The euro's continued strength in the face of a steady
reining-in of U.S. monetary policy stimulus and of expectations
that the European Central Bank will be forced at some stage to
do the opposite has become one of this year's dominant trends.
Policymakers at the euro zone's central bank have talked
aggressively about their willingness to take action to head off
a debilitating cycle of falling prices and demand, and as such
have outright opposed any further gains for the euro.
But they face substantial barriers to delivering the sort of
decisive policy action that would weaken the currency at a time
when capital is flooding back into the euro zone's peripheral
economies and stock markets.
(Additional Reporting By Patrick Graham in London; editing by