U.S. dollar drifts higher; traders eye non-farm payrolls

* Traders look to U.S. non-farm payrolls

* Omicron fears still weighing on FX

* Fed officials back Powell's accelerated taper move

* U.S. initial jobless claims give dollar brief boost

* Graphic: World FX rates Link

By Gertrude Chavez-Dreyfuss

NEW YORK, Dec 2 (Reuters) - The dollar edged higher on Thursday in choppy trading as risk appetite improved with higher U.S. stocks, although investors remained worried about the fast-spreading Omicron coronavirus variant and the speed at which the U.S. Federal Reserve will taper its asset purchases.

The U.S. currency's moves were limited though, as investors looked ahead to Friday's non-farm payrolls report for November.

"A really strong payrolls report as we're projecting could be another element to re-asserting the dollar," said Mazen Issa, senior FX strategist at TD Securities in New York.

Wall Street economists have estimated the U.S. economy created 550,000 new jobs last month, a Reuters poll showed.

In afternoon trading, the dollar index, which tracks the greenback against six major currencies, rose 0.1% to 96.131 =USD .

The index dropped last week after news of Omicron first emerged, although it remains close to a 16-month high of 96.938 hit last month.

On Thursday, the United States recorded its second case of the Omicron variant, but that has had muted impact on stocks and other risk assets.

"Anecdotal evidence seems to suggest that it may not be as severe as many people feared," said TD's Issa.

"If there's anything to take away from all of these is that the impact of the virus' successive waves tends to be less and less the longer it goes. Yes, it's still a risk, but vaccine makers are able to adjust to address it," he added.

The United States and Germany joined countries around the globe planning stricter COVID-19 restrictions on Thursday.

The dollar rose 0.4% versus the yen to 113.155 JPY=EBS .

The greenback earlier gained after U.S. data showing initial claims for state unemployment benefits rose 28,000 to a seasonally adjusted 222,000 for the week ended Nov. 27, lower than the forecast of 240,000.

Sterling, meanwhile, rose 0.2% to $1.3298 GBP=D3 , while the euro slipped 0.2% to $1.1294 EUR=EBS .

Scotiabank, in a research note, highlighted the euro's allure as "a semi-haven currency." Since the Omicron story broke last week, the euro has gained 0.9% versus the dollar.

However, Scotia expects the euro to weaken toward the $1.10/11 zone given weak near-term economic and rates fundamentals, although virus uncertainty should keep it in a $1.12-$1.14 range for now.

Currency volatility trackers remain at multi-month highs, suggesting big moves could still be in store, analysts noted.

Traders are also awaiting clarity on how quickly the Fed will taper its asset purchases, as central banks around the world grapple with how to unwind stimulus amid soaring inflation.

Fed Chair Jerome Powell reiterated in testimony to Congress on Wednesday that he and fellow policymakers will consider swifter action at their Dec. 14-15 meeting.

Several Fed officials - Atlanta Fed President Raphael Bostic, Richmond Fed President Thomas Barkin, and San Francisco Fed President Mary Daly - on Thursday echoed Powell's comments.


Currency bid prices at 3:09 PM (2009 GMT) Description



U.S. Close Pct Change


High Bid

Low Bid




Dollar index







+95.8240 Euro/Dollar







+$1.1295 Dollar/Yen






+113.3200 +112.6300 Euro/Yen






+128.2200 +127.6500 Dollar/Swiss







+0.9180 Sterling/Dollar GBP=D3






+$1.3268 Dollar/Canadian CAD=D3






+1.2779 Aussie/Dollar







+$0.7084 Euro/Swiss







+1.0402 Euro/Sterling







+0.8490 NZ







+$0.6799 Dollar/Dollar








+9.0590 Euro/Norway







+10.2510 Dollar/Sweden







+9.0269 Euro/Sweden








World FX rates Link

Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Iain Withers in London; Editing by Emelia
Sithole-Matarise, Nick Macfie, Andrea Ricci and Dan Grebler

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