FOREX-Dollar dips as jobless claims rise more than expected

(Adds quotes, details; updates prices; changes byline, dateline, previous LONDON) By Karen Brettell NEW YORK, March 9 (Reuters) - The dollar dipped on Thursday after data showed that U.S. jobless claims rose more than expected last week, raising hopes that a softening labor market will reduce the likelihood of the Federal Reserve reaccelerating the pace of its rate hikes. Initial claims for state unemployment benefits rose 21,000 to a seasonally adjusted 211,000 for the week ended March 4. Economists polled by Reuters had forecast 195,000 claims for the latest week. It comes before Friday’s highly anticipated jobs report for February, which may determine whether the Fed increases its pace of rate hikes to 50 basis points at its March 21-22 meeting. “A lot of traders are breathing a sigh of relief that we’re starting to see some softness in the labor market,” said Edward Moya, senior market analyst at OANDA in New York. “The fear is that if we get a strong payrolls report tomorrow that that’s just going to cement the rising expectations of a half point rate increase.” The dollar was last down 0.30% against a basket of currencies at 105.29. It is down from a three-month high of 105.88 on Wednesday. The euro gained 0.25% to $1.0570 and is up from a two-month low of $1.0524 on Wednesday. Fed Chair Jerome Powell on Wednesday reaffirmed his testimony before Congress from Tuesday of higher and potentially faster interest rate hikes, but emphasized that debate was still underway, with a decision hinging on data to be issued before the March meeting. Fed funds futures traders are now pricing in a 66% probability that the Fed will hike rates by 50 basis points, up from around 22% before Powell’s comments early on Tuesday. Friday’s data is expected to show employers added 205,000 jobs in February, well below the much-larger-than-expected 517,000 gains in January. Wages are expected to have increased by 0.3% for the month, and by 4.7% on an annual basis. Consumer price inflation data on Tuesday will also be key to the Fed’s decision. It is expected to show that prices rose by 0.4% in February. The yen gained before the Bank of Japan on Friday will conclude its final meeting with governor Haruhiko Kuroda.

The Japanese central bank is expected to end its long-term yield control policy this year, but make no major changes this week, according to a Reuters poll of economists. The dollar fell 0.84% against the Japanese currency to 136.23 yen. It reached a three-month high of 137.90 on Wednesday.

======================================================== Currency bid prices at 9:25AM (1425 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change

Session
Dollar index 105.2900 105.6300 -0.30% 1.739% +105.7300 +105.2100 Euro/Dollar $1.0570 $1.0544 +0.25% -1.35% +$1.0581 +$1.0539 Dollar/Yen 136.2250 137.3650 -0.84% +3.89% +137.3350 +135.9500 Euro/Yen 143.99 144.82 -0.57% +2.63% +144.8500 +143.6400 Dollar/Swiss 0.9379 0.9414 -0.40% +1.41% +0.9415 +0.9367 Sterling/Dollar $1.1908 $1.1843 +0.54% -1.54% +$1.1919 +$1.1836 Dollar/Canadian 1.3778 1.3804 -0.22% +1.66% +1.3816 +1.3766 Aussie/Dollar $0.6623 $0.6590 +0.55% -2.79% +$0.6636 +$0.6577 Euro/Swiss 0.9912 0.9925 -0.13% +0.17% +0.9931 +0.9895 Euro/Sterling 0.8874 0.8900 -0.29% +0.34% +0.8913 +0.8876 NZ $0.6136 $0.6105 +0.54% -3.33% +$0.6151 +$0.6099 Dollar/Dollar
Dollar/Norway 10.6280 10.6750 -0.45% +8.28% +10.6880 +10.6270 Euro/Norway 11.2374 11.2660 -0.25% +7.09% +11.2800 +11.2290 Dollar/Sweden 10.7068 10.7274 +0.02% +2.87% +10.7420 +10.6752 Euro/Sweden 11.3192 11.3167 +0.02% +1.52% +11.3363 +11.2744

(Reporting by Karen Brettell; Editing by Andrea Ricci)