LONDON, Aug 7 (Reuters) - The dollar was little changed on Friday ahead of the U.S. monthly payrolls report, but remained on track for a weekly gain against major peers as uncertainty over a possible Iran peace deal buoyed the U.S. currency's safe-haven appeal.
The closely watched payrolls report (USNFAR=ECI), could offer fresh clues on the Federal Reserve's policy path as markets assess the possibility of another interest rate hike.
U.S. nonfarm payrolls are forecast to have risen by 80,000 last month after an increase of 57,000 in June, according to a Reuters survey of economists. The unemployment rate (USUNR=ECI), is expected to hold steady at 4.2%.
"It is all about payrolls today," Nick Rees, head of macro research at Monex Europe, said, noting there could be a "modest" dollar selloff if the report comes in softer than expected.
The dollar index — which measures the currency against a basket of six major peers, including the euro, yen and sterling — was a touch lower at 99.926, but up just over 0.1% for the week, following a 1.6% drop the previous week.
The greenback traded around 0.1% lower at 158.29 yen , after gaining 0.4% on Thursday.
That kept the dollar-yen pair on course to rise almost 0.5% this week, as it recovered from a bout of joint Japan-U.S. intervention that sent it tumbling from near a four-decade high above 163 to a 13-week low of 155.20 on Monday.
Against the euro , the dollar was steady at $1.1528, while sterling dipped 0.13% to $1.3434.
Tensions remained elevated in the Gulf. Saudi Arabia expects coordinated attacks by Iraqi militias from the north and Yemen's Houthis from the south under the supervision of Iran's Revolutionary Guards, a senior Saudi official said.
At the same time, investors were weighing signs that Gulf states and Iran were moving closer to a temporary agreement to reopen the Strait of Hormuz and pave the way for broader talks aimed at ending the war.
Brent crude was last down 0.7% at $81.9 per barrel.
Inflation concerns have weighed on U.S. Treasuries, pushing yields higher.
"USD was supported by higher oil prices (following) news that a deal between the U.S. and Iran to reopen the strait is further away than hoped," Kristina Clifton, an economist at Commonwealth Bank of Australia, said.
She and other analysts also pointed to a Financial Times report citing sources close to Fed Chair Kevin Warsh that referred to the potential for a September rate hike, depending on incoming data — though Clifton added: "We expect the Fed to wait until December before starting a modest tightening cycle."
A divided U.S. central bank left rates unchanged last month, but Warsh said he was committed to bringing inflation down.
Reporting by Kevin Buckland in Tokyo and Sophie Kiderlin in London. Editing by Andrew Heavens and Mark Potter
