FOREX-U.S. jobs data next test for bullish dollar, euro struggles

* Dollar index hovers near 11-year high, jobs data next test

* Euro struggles, ECB to start bond buying next week

* Swiss franc reserves suggest SNB didn’t intervene in Feb (Updates after start of European trade, changes dateline from previous SYDNEY/TOKYO)

By Patrick Graham

LONDON, March 6 (Reuters) – The dollar resumed its rise against the euro in early European deals on Friday, with U.S. jobs data due later likely to decide whether it builds on 11-1/2 year highs hit after the European Central Bank met on Thursday.

Against a basket of major currencies the dollar also hovered around 11-year highs, but dealers saw little prospect of further moves before the non-farm payroll numbers start the U.S. day at 1230 GMT.

“It certainly looks like being a classic pre-payrolls morning,” said Michael Sneyd, a strategist with French bank BNP Paribas in London.

“We are dollar bulls but the dollar has done very well since the ISM services and ADP jobs figures on Wednesday so that raises the bar substantially for the numbers today to push the dollar higher.”

BNP expect U.S. employers to have added 250,000 jobs in February, compared to a consensus of 240,000, and Sneyd said a figure in line with that might not prove enough to push the dollar strongly past Thursday’s highs.

In early trade in Europe the greenback was 0.2 percent higher than Thursday’s U.S. close at $ 1.1013, compared to the 11-1/2 year high of 1.09875.

On other European markets, data from the Swiss central bank showed a rise in foreign currency reserves over the past month that strategists said should largely be accounted for by the change in the franc’s value, suggesting the Swiss National Bank has not been intervening heavily against the currency.

The franc has fallen back to around 1.07 francs per euro from less than 1 franc per euro just over a month ago, and there had been market speculation the SNB was intervening in the early days following its abandonment of a peg against the euro on Jan. 15. It traded 0.1 percent higher against the euro at 1.0734 on Friday.

The dollar’s strength since last July, widely expected by the major banks to continue, has come in bouts. After more than a month of relative stability since the ECB announced its programme of quantitative easing in January, it has gained around 3 percent in just over a week.

That move was provoked by a perceived shift in rhetoric from U.S. Federal Reserve officials and the jobs numbers will be scrutinised for signs of the improvement that Chair Janet Yellen said would lead the bank to consider hiking rates on a “meeting-by-meeting basis”.

The ECB’s launch of its bond-buying programme next week is also seen as keeping pressure on the single currency.

“The dollar is following a well-worn path of being bought on expectations of strong payrolls. Yellen touched on the Fed’s data dependent aspect and the market has become more sensitive to indicators,” said Shinichiro Kadota, chief Japan FX strategist at Barclays in Tokyo.

(Additional reporting by Shinichi Saoshiro and Ian Chua; Editing by Gareth Jones)

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