FOREX-Dollar steadies as labor market data takes center stage

By Chibuike Oguh and Amanda Cooper

NEW YORK/LONDON, Sept 4 (Reuters) - The U.S. dollar was steady on Thursday in a volatile week ahead of a crucial jobs report and with data indicating labor market weakness, which has reinforced expectations the Federal Reserve will cut rates this month.

Data showed on Thursday that the number of Americans filing new applications for jobless benefits increased more than expected last week, consistent with softening labor market conditions. Furthermore, the ADP National Employment Report showed U.S. private payrolls increased less than expected in August.

The dollar edged higher in relatively steady trade, reflecting investor wariness of making any big moves ahead of Friday's more comprehensive non-farm payrolls report.

The dollar strengthened 0.26% to 148.47 against the Japanese yen JPY=EBS. It was up 0.16% to 0.80545 against the Swiss franc CHF=EBS. The greenback lost ground against both safe-haven currencies on Wednesday. The euro EUR=EBS fell 0.11% to $1.1645.

"It's been choppy ... with enough questions around where the economy is that people are just trying to likely square up before Friday's number and not taking any outward bets one way or the other," said Marvin Loh, senior global market strategist at State Street in Boston.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.2% to 98.34 after dropping in the previous session.

U.S. Treasury yields slipped. The 2-year note US2YT=RR yield fell 1.4 basis points to 3.598%. The yield on benchmark U.S. 10-year notes US10YT=RR fell 2.5 basis points to 4.186%.

Traders are pricing in a near-100% chance of the Fed cutting interest rates later this month, up from 89% a week ago, CME FedWatch showed.