Dollar edges up versus euro

The dollar edged up against the euro on Friday as market players squared positions before the US jobs report later in the day, looking for clues on the magnitude of an expected Federal Reserve interest rate cut next week.
The dollar slid from a three-week high against the euro the previous day after the European Central Bank reiterated concerns about the inflation outlook and stirred expectations for higher rates next year.
The single European currency got a boost after ECB President Jean-Claude Trichet warned of strong upward pressure on inflation and said some central bankers had wanted a rate rise from the current 4.0 percent.
But currency market activity was subdued as market players await the US employment report, with investors debating if the Fed will cut rates by a quarter-point or a more aggressive half-point at next Tuesday's meeting to help the economy.
The dollar has clawed back from record lows hit against the euro last month on rising hopes for a resolution of this year's credit troubles, helped by news such as a White House plan to limit mortgage defaults announced on Thursday.
The euro slipped 0.15 percent to $1.4612 but stayed above a three-week low of $1.4525 hit on Thursday before the ECB decision. The dollar edged up 0.1 percent from late US trade to 111.34 yen and was near a three-week high of 111.47 yen hit on Thursday.
A clear break above the 111.50/80 yen area would reduce the dollar's immediate downside risks, said Minoru Shioiri, chief manager of forex trading at Mitsubishi UFJ Securities. "The closing New York level after the US payrolls data will decide the dollar's direction next week," Shioiri said, adding that a close below 111 yen will leave the chance that the US currency will test its downside again in the near term.
The dollar hit a 2-1/2 year low of 107.22 yen late last month on electronic trading platform EBS. Standard Chartered's Katz said that how the previous US payrolls data is revised and whether the unemployment rate rises further would likely determine how the market reacts to the data.
Against the yen, the euro edged down 0.1 percent to 162.63 yen The pound slipped to $2.0242 but pulled up from two-months lows after some analysts said the Bank of England struck a balanced tone in its statement after cutting rates by a quarter-point to 5.5 percent.