Dec 3 (Reuters) - The dollar ticked higher on Friday amid a broadly calmer tone in markets as fears over Omicron's impact eased, but currency moves were muted ahead of a key U.S. payrolls report that could clear the path to earlier Federal Reserve interest rate hikes.
Scientists in South Africa, where the Omicron variant was first discovered last month, said existing vaccines should still protect against severe disease and death. The three Omicron cases identified in the U.S. also all displayed mild symptoms.
Elsewhere, Fed officials speaking on Thursday joined Chair Jerome Powell in striking hawkish stances, with San Francisco Fed President Mary Daly saying it may be time to "start crafting a plan" to raise rates to combat inflation, and Richmond Fed President Thomas Barkin throwing his support for "normalizing policy." read more
"Fed talk overnight was undeniably hawkish," Tapas Strickland, a director for economics at National Australia Bank, wrote in a client note.
Omicron headlines were "net positive" overnight, helping risk sentiment to recover, but with the first assessments of the efficacy of current vaccines probably still a week or so away, "expect ongoing volatility," Strickland said.
The dollar index , edged higher for a third day, rising 0.03% to 96.117. For the week, the dollar is little changed, despite a steep drop on Tuesday. Friday of last week though, the index had plunged 0.70%, the most since May.
Powell reiterated in testimony to Congress on Wednesday that he and fellow policymakers will consider swifter action at their Dec. 14-15 meeting.
Economists in a Reuters poll estimate the United States created 550,000 new jobs last month, continuing a run of strong data.
Money market see high odds that the Fed will raise the target rate by a quarter point at its June meeting.
The dollar slipped 0.09% to 113.10 yen on Friday, but that came after a 0.4% gain overnight.
The euro was little changed at $1.13025, consolidating after its drop to an almost 17-month low at $1.1186 last week.
The risk-sensitive Australian dollar eased 0.12% to $0.7084, a fourth losing session.
Both the European Central Bank and Reserve Bank of Australia have stuck to dovish stances, pushing back against market bets that policymakers will be forced to bow to inflationary pressures.
"We continue to expect near‑term AUD moves will be driven by Omicron and the risk remains a dip below $0.7000," Commonwealth Bank of Australia strategist Joseph Capurso wrote in a report.
For Friday though, "the U.S. labour market takes centre stage," and should keep currency markets quiet, Capurso said.
Reporting by Kevin Buckland Editing by Shri Navaratnam