By Kevin Buckland
TOKYO, Nov 5 (Reuters) - The dollar was on course for asecond straight week of gains against major peers on Friday,ahead of a key U.S. jobs report that could sway the timing ofFederal Reserve interest rate increases.
Sterling headed for its worst week in 11 after the Bank ofEngland caught the market off-guard by keeping rates steady onThursday.
The dollar index , which measures the greenbackagainst a basket of six rivals, was steady at 94.341 afterrallying 0.51% overnight. That lifted it into the positive forthe week, adding 0.21%.
The British pound was little changed on Fridayfollowing a 1.36% tumble in the previous session that set it upfor a 1.34% slump for the week.
Investors have been forced to reset monetary policyexpectations this week, after some of the biggest central banksknocked back bets for early rate hikes. European Central Bank President Christine Lagarde pushedback on Wednesday against market bets for a rate hike as soon asnext October and said it was very unlikely such a move wouldoccur in 2022. Also on Wednesday, Fed Chair Jerome Powell said he was in norush to hike borrowing costs, even as the Federal Open MarketCommittee announced a $15 billion monthly tapering of its $120billion in monthly asset purchases. The Fed has set a labour market recovery as a condition forrates lift-off. U.S. non-farm payrolls are due later Friday, andeconomists predict a surge of 450,000 jobs in October, followinga 194,000 rise in the prior month.
"The FOMC delivered a 'dovish taper,' but the USD is stillbetter positioned than most," Westpac strategists wrote in aclient note.
"Payrolls this week should be at least as strong asconsensus given signs that recovery momentum is acceleratingagain," making dips into the mid-93s a buying opportunity forthe dollar index, they said.
The euro was little changed at $1.1552 afterdropping 0.49% overnight, putting it on course for a slightdecline this week.
The dollar was about flat at 113.78 yen , down0.22% since last Friday. While the Bank of Japan is set to beslowest among developed-market central banks to normalizepolicy, the Japanese currency benefited as those expectationsremained constant while investors cut bets elsewhere.
The Reserve Bank of Australia set the tone for the week onTuesday, when policy makers stuck to their dovish stance in theface of increasingly sticky inflation pressures. The Aussie dollar was about flat at $0.74025 onFriday, holding the previous session's 0.67% decline and oncourse for a 1.56% drop this week.
New Zealand's kiwi dollar was also mostly unchangedat $0.7104 after a 0.81% slide on Thursday, setting up a 0.96%weekly loss.
Among cryptocurrencies, bitcoin was around$61,300, having largely traded sideways since it hit itsall-time high above $67,000 last month.
Ether , the second-biggest cryptocurrency, tradedaround $4,500 after hitting a record high of $4,670.81 onWednesday.
(Reporting by Kevin Buckland; Editing by Lincoln Feast.)