FOREX-Dollar holds near lows before U.S. jobs data

Reuters

* Market cautious before U.S. jobs data at 1230 GMT

* Upside surprise could give dollar short-term boost

* Report delayed from early Oct due to U.S. govt shutdown

By Jessica Mortimer

LONDON, Oct 22 (Reuters) - The dollar held near its recentlows on Tuesday, with investors cautious before delayed jobsdata that will give an indication of the strength of the U.S.economy before this month's government shutdown.

Most market participants expect the negative impact of theshutdown on the economy will lead the U.S. Federal Reserve todelay scaling back its stimulus programme until 2014.

The dollar index, which tracks the dollar'sperformance against a basket of major currencies, was steady at79.727, holding above Friday's 8-1/2 month low of 79.478.

The euro was steady at $1.3680, below Friday's highof $1.3704, its strongest since early February, and chartresistance at the 2013 peak of $1.3711.

Payrolls are expected to have increased by 180,000 inSeptember, with the jobless rate steady at 7.3 percent. Thefigures are due at 1230 GMT.

Analysts said a better number may boost the dollar but thiscould be short-lived as the data, originally due on Oct. 4, doesnot cover the shutdown and wrangling over the debt ceiling.

Ian Stannard, head of European FX strategy at MorganStanley, expected investors to remain cautious before the data.

"Any signs of weakness could push back Fed tapering. If itis a strong number it would suggest that the shutdown may havehad only a limited impact, but the reassurance (for the dollar)may prove to be short-lived."

But Hiroki Shimazu, senior market economist for SMBC NikkoSecurities in Tokyo, said jobs growth of around 180,000 andupward revisions to the July and August numbers could promptspeculation about the Fed reducing stimulus in December.

Chicago Fed President Charles Evans said on Monday it wouldbe "tough" for the Fed to have enough confidence in the economyby its December meeting to start scaling back stimulus.

The fiscal deal clinched last week by U.S. lawmakers onlyrestored government funding until Jan. 15.

The dollar nudged up 0.1 percent to 98.28 yen.

The Australian dollar was up 0.1 percent at $0.9660, close to a 4-1/2 month high of $0.9680 set on Friday.A move above $0.97 would see it retrace half of itsApril-to-August fall and could allow a move towards parity.

Morgan Stanley's Stannard expected the Australian dollar tooutperform and rise towards $0.98 in the near-term as itbenefits from higher interest rates and the fact that Australiahas stronger links to China than to the United States.

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