Dollar extends recent gains in London

The dollar extended recent gains to four-month highs on the yen and held fairly steady versus the euro on Friday on expectations the United States would report jobs data later that could hasten US interest rate hikes.
Bets the US saw its fastest jobs growth in more than three years last month boosted the dollar this week to 2004 peaks versus the yen and the euro. Investors are now focused on whether the 125,000 new jobs analysts have forecast for the 1330 GMT report will materialise.
The greenback received help climbing above 111.40 yen, its highest since November 3, from speculation Japan has continued intervening to weaken the yen after stopping its rise at 3-1/2 year highs versus the dollar set last month.
"It's all about the payroll result. That's absolutely pivotal to whether or not this bear market rally in the dollar can continue and thus develop the potential to turn into something more serious," said Steven Pearson, chief currency strategist at Halifax Bank of Scotland Treasury Services.
"If we do get a decent payroll report that will bring forward expectations of the first rate hike from the US Federal Reserve."
By 1240 GMT the dollar remained little changed on the day at $1.2190 per euro.
After the dollar rallied nearly five cents earlier this week to peak at $1.2056, slight support for the euro emerged on Thursday from the European Central Bank, which held rates steady at two percent and gave no sign an interest rate cut was near.
The dollar retreated a little by European mid-session to 111.21 yen, a touch firmer versus its previous New York close, and markets remained focused on possible Bank of Japan yen-selling intervention.
"No one is ready to put on short dollar/yen positions," said Niels Christensen, currency strategist at Societe Generale in Paris.
The labour market has been the weak spot in the US economic recovery and the market is looking for signs of stronger growth in payrolls to prompt the US Federal Reserve to raise interest rates and make dollar returns more attractive.
Economic derivatives offered by Deutsche Bank and Goldman Sachs showed markets betting on Friday for February jobs growth of around 137,000. Markets had been going for about 145,000 on Thursday.