LONDON, July 3: The dollar perked up on Thursday ahead of anxiously awaited US labour market data, buttressed by a recent cooling of the government bond market, analysts said.

The single European currency fell to $1.1456 from 1.1538 late on Wednesday in New York.

The dollar stood at 118.28 yen against 118.12 on Wednesday.

The dollar is moving higher in reaction to the bond markets’ performance, particularly in Japan overnight, said Bear Stearns strategist Steve Barrow.

The extent of the weakness in the European bond market has also created the need for a sense of safety, which is being reflected in a push into dollar.

Separately, some of the weakness in higher yielding currencies has led to a slight risk-aversion move into the dollar, at the expense of the euro, he added.

The yield on Japanese government bonds (JGBs) hit a nine-month high as investors looked to switch into fast-rising stock markets. Bond yields and prices move in opposite directions.

The move followed weaker than usual demand for British and German government bonds at auctions on Wednesday, raising concerns the recent boom in the bond market may be drawing to an end.

Dealers were also waiting nervously for monthly US labour market data due to be released later Thursday, a day earlier than usual owing to the Independence Day holiday in the United States on Friday.

The Institute for Supply Management’s index of non-manufacturing activity was also expected to grab attention.

UBS Warburg strategist Shahab Jalinoos said the two sets of figures would be crucial in determining the initial trajectory for the resumption of the dollar downtrend in the third quarter.

A reading below 50 indicates a contraction in the sector.

The euro was changing hands at $1.1456 from 1.1538 late on Wednesday in New York, 135.44 yen (136.34), 0.6891 pounds (0.6949) and 1.5508 Swiss francs (1.5513).

The dollar was being quoted at 118.28 yen (118.12) and 1.3540 Swiss francs (1.3440).

The pound was at 1.6626 dollars (1.6662), 196.61 yen (196.82) and 2.2506 Swiss francs (2.2394).

On the London Bullion Market, the price of an ounce of gold stood at $349.95 dollars from 351.30 on Wednesday afternoon. —AFP