The dollar steadied against other major currencies on Friday, hugging tight ranges as investors shifted their focus to upcoming U.S. employment data from the credit and stock market volatility of recent weeks.

The monthly non-farm payrolls report could give a clearer picture of the health of the U.S. economy and help set the tone in currency markets for the next week.

Steadier credit and global equity markets over the past 24 hours have helped add a veneer of calm to foreign exchanges. But many analysts say markets remain on edge.

We are seeing some consolidation. It doesn't mean it's all over, FX markets are (still) keeping one eye on equity markets and credit ... It's going to be a nervous summer, for sure, but at least for this week we've seen the worst of it, Mitul Kotecha, head of global foreign exchange research at Calyon.

He added that given the recent rise in expectations for a U.S. interest rate cut, a strong reading from the jobs data -- signaling that the economy is doing alright after all -- would have a potentially bigger market impact than a weak number.

By 5:36 a.m. EDT, the dollar index, a measure of the greenback's value against six heavily traded counterparts, was steady at 80.71.

The dollar was little changed at 119.12 yen, according to Reuters data, off four-month lows of 117.58 yen set at the height of risk aversion earlier this week.

The dollar has held up relatively well during the latest bout of financial market volatility, benefiting from some repatriation flows as investors reduced their exposure to risk across the board and cut positions, be they profitable or not.

The euro was also flat at $1.3699 and 163.15 yen, after rising on Thursday after the European Central Bank kept interest rates on hold at 4 percent, as expected, but signaled a possible rate hike in September.

There was little market reaction to softer than expected data on euro zone retail sales and on the service sector.


In Asia, the Nikkei share average closed flat on the day, while European shares were trading marginally lower. Stock market futures pointed to a lower open on Wall Street after a late-Thursday rally.

Economists expect the U.S. payrolls data at 8:30 a.m. EDT to show 130,000 non-farm jobs were added in July, little changed from 132,000 the previous month.

They expect the unemployment rate to remain at 4.5 percent.

The private sector ADP report on Wednesday -- which some analysts say is not an indicator for payrolls -- suggested only 48,000 jobs were added in July.

If the weak ADP private employment data earlier works as a good guide for the non-farm payroll and a smaller increase is confirmed, risk positions such as yen-funded carry trades may be negatively affected, Citi currency strategists said in a note.

Though our U.S. economists continue to be cautious about putting too much emphasis on the employment report.

Federal Reserve officials, meanwhile, said on Thursday that problems in the subprime mortgage market have not affected the overall economy for the moment but added that the weakness could weigh on the housing market for longer than previously thought.