FOREX-Dollar headed for fifth straight week ahead of key U.S. jobs report

TOKYO Reuters -- The dollar was headed for a fifth winning week versus major peers on Friday, ahead of a closely watched U.S. jobs report that's likely to back the case for monetary policy tightening.

The dollar was up for a ninth week against the yen as benchmark U.S Treasury yields resumed their climb - topping 3.1% overnight after the Federal ReserveFederal Reserve raised interest rates by half a percentage point mid-week, placing it at the vanguard of hawkish global central banks.

According to a Reuters poll, economists predict that there will be 391,000 U.S. jobs added last month.

The dollar index, which tracks the currency against six rivals, was 0.02% higher to 103.59 on Friday, putting it up 0.35% for the week. It touched 103.94 in the previous session for the first time in two decades.

The greenback moved closer to last week's 20 year top of 131.25 and gained 0.22% to 130.46 yen, gaining 0.46% on the week.

The dollar fell sharply on Wednesday, as Fed Chair Jerome Powell said that a 75 basis point increase is not under active consideration after the rate hike.

It recovered its losses on Thursday, suggesting that the retreat had more to do with positioning than any change in views, according to analysts at the National Australia Bank.

Gavin Friend, senior market strategist at NAB, said Powell was unambiguously hawkish.

He said that they will do what they can to do to bring inflation to heel, buoying U.S. yields and the dollar.

NAB revised its currency forecasts on Friday, predicting the dollar to strengthen to $1.02 per euro and $1.20 versus sterling by end-September, but easing slightly to 125 yen by that time.

The euro fell 0.11% to $1.0529 on Friday, keeping it down 0.12% for the week, but the currency has mostly traded sideways since it fell to a five-year trough of $1.04695 last week.

The pound fell 0.05% to $1.23475, down 1.81% for the week. It dropped 2.22% overnight, the most in two years, after the Bank of England warned of the risk of a recession as it raised interest rates by half a percentage point.

The previous session, when it touched a low of $35,579, extended the 7.94% drop to $36,225. A level that hasn't been seen since February is 40.

The Aussie dollar fell 0.27% to $0.7093, but bucked the trend for the week, falling 0.22% against the dollar after the central bank raised rates by more than expected and signalled further moves ahead.