* Dollar likely to fall in coming week on rate outlook
* Weak U.S. jobs data dents optimism on U.S. recovery
* Data next week includes CPI and sentiment surveys
NEW YORK, Jan 8 (Reuters) - The U.S. dollar is expected to fall in the week ahead as the U.S. economy continues to lose jobs, maintaining pressure on the Federal Reserve to keep interest rates low.
Lower rates reduce the attractiveness of U.S. assets and stem demand for the dollars to buy them.
U.S. employers unexpectedly cut 85,000 jobs in December, government data showed on Friday, with the unemployment rate unchanged at 10 percent in December, cooling optimism on the labor market's recovery [ID:nN07203048]
The Labor Department said November payrolls were revised to show the economy actually added 4,000 jobs in that month rather than losing 11,000 as initially reported. With revisions to October, however, the economy lost 1,000 more jobs than previously estimated over the two months.
"The unemployment rate of 10 percent will continue to pressure the Fed. to maintain its current accommodative stance and that will hurt the dollar," said Andrew Bekoff, chief investment officer for Family Office Group in New York.
In the first full trading week of 2009, the euro rose 0.1
percent
That reversed the trading trend for the month of December, 2009, where the euro fell 4.6 percent against the dollar and the dollar gained 7.6 percent against the yen.
"We believe year-end positioning played a more important role in the dollar's December gains than fundamentals and we expect those gains to be reversed," said Brown Brothers Harriman in a note to clients.
"The Fed funds market, which may have gotten ahead of itself in December in pricing in an early Fed hike, has already pared back expectations in January, a factor that will help support the use of the dollar as a low yielding currency for funding risk on trades," said Brown Brothers Harriman.
A carry trade involves borrowing in a currency offering relatively low borrowing costs in order to invest the proceeds in a higher-yielding currency.
DATA GLUT
A glut of U.S. data releases will give investors much to ponder with the schedule of reports getting heavier as the week progresses.
U.S. international trade for November will be released on Tuesday with economists polled by Reuters forecasting a deficit of $35 billion.
Wednesday sees the release of the Federal budget for December with a forecast deficit of $92 billion.
Thurday's slew of releases includes weekly jobless claims, import and export prices for December, retail sales for December and business inventories for November.
Import prices are expected to rise 0.2 percent while export prices are slated to rise 0.5 percent.
Retail sales are forecast to rise 0.4 percent in December over the prior month in the headline number and 0.3 percent excluding autos.
Weekly initial jobless claims are forecast to post aat 440,000.
November business inventories are expected to neither decline of grow in the month.
The first tier data scheduled for Friday includes the December consumer price index, December industrial output and the preliminary Reuters/University of Michigan sentiment surveys for January as well as several other reports.
Consumer prices are forecast to rise 0.2 percent in December on the headline number and 0.1 percent excluding food and energy.
Industrial output is expected to rise 0.6 percent in the same month.
The sentiment surveys is expected to post at 73.5 in January. (Reporting by Nick Olivari)