Dollar steady after robust US jobs data

TOKYO (AFP) - The dollar hovered near a four-month high against the yen in Asian trade Monday after robust US jobs data further reduced expectations of a Federal Reserve interest rate cut this year, dealers said.

The dollar stood at 122.02 yen in Tokyo morning trade, down slightly from 122.09 in New York late last Friday.

The euro was steady at 1.3446 dollars after 1.3442 and a touch weaker at 164.04 yen from 164.12.

"Better-than-expected data corrected market pessimism on the US economy and lowered expectations of a Fed rate cut," said Toru Umemoto, chief forex strategist at Barclays Capital in Tokyo.

The dollar rose Friday after data showed the US economy added a net 157,000 jobs in May.

The payrolls report, seen as one of the best economic indicators, was well ahead of the Wall Street consensus forecast of 135,000 new jobs and eased investor concern about slowing US growth, dealers said.

The likelihood of recession in the United States "has faded rapidly," said National Australia Bank strategist John Kyriakopoulos in Sydney, adding that the data suggested the housing market downturn was not affecting employment.

The Federal Reserve has held its key lending rate at 5.25 percent for nearly a year but market participants have reduced their expectations that the central bank will need to cut rates as the economy slows.

The market was also digesting a government survey showing that capital investment by non-financial companies in Japan was 13.6 percent higher in the first quarter of 2007 than a year earlier, up for a 16th straight quarter.

Players were also looking ahead to a European Central Bank meeting on Wednesday when economists expect interest rates to be raised by a quarter-point to a five-and-a-half year high of 4.00 percent.

It would be the eighth such rate rise since December 2005 as the central bank seeks to curb inflation across the 13-nation eurozone.