* Wait-and-see mood takes hold before US jobs data
* ECB seen keeping policy expansive despite rising inflation
* Likelihood of March Fed rate hike seen mostly priced in
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, March 8 The dollar steadied on
Wednesday, with investors broadly taking a "wait-and-see"
approach ahead of a U.S. labour market report later in the week,
which follows a European Central Bank policy meeting.
The greenback last week hit a two-month high against a
basket of currencies, as hawkish comments from U.S.
Federal Reserve officials drove a dramatic revision of
investors' expectations of a March hike, from around a 30
percent chance to around an 87 percent chance now.
But having rallied almost 2.5 percent over the past five
weeks, the U.S. currency is now sitting in a narrow range, with
a rate increase next week seen essentially as a done deal, and
Friday's non-farm payrolls report therefore seen as unlikely to
move the dollar much.
It was flat against the basket on Wednesday at 101.89.
While the Fed looks set to hike rates for the third time in
18 months, the ECB looks likely to keep its monetary policy
expansionary when it meets on Thursday, despite rising
The euro, which has fallen almost 5 percent against the
dollar since the election of U.S. President Donald Trump, inched
down 0.1 percent on Wednesday to $1.0557, staying
comfortably within the $1.0450-$1.0850 range its has traded in
for the past two months.
"We're just waiting for tomorrow now – the ECB –and then
after tomorrow we're going to be waiting for next week and the
Fed," said DZ Bank currency strategist Sonja Marten, in
"The ECB is the more interesting of the two, because with
the Fed it’s clear that they’re going to hike rates," she said.
"The inflation rate is finally rising (but)... my best guess is
that (ECB President Mario) Draghi is going to succeed tomorrow
to keep things on a fairly even keel."
The Swiss franc was little changed at 1.0135 per
dollar after retreating to 1.0170 overnight, its weakest since
Jan. 11, hurt by a rise in the Swiss National Bank's foreign
exchange reserves, and statements from SNB Chairman Thomas
Jordan that the franc was "significantly over-valued."
The dollar was also flat at 113.96 yen after rising
modestly to 114.160 overnight.
The greenback has had a difficult time staying above the 114
yen threshold amid uncertainty about Washington's potentially
protectionist trade stance. Trump's administration is expected
to react should the dollar gain strongly against the currencies
of major trade partners such as Germany, Japan and China.
Masafumi Yamamoto, chief forex strategist at Mizuho
Securities in Tokyo, said coming events including the U.S.
Treasury's semi-annual currency report in April are events that
"could push the trade theme to the fore" for the U.S.
For Reuters 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 Shinichi Saoshiro in Tokyo)