* Dollar index rises, on track for weekly gain
* U.S. Congress passes bill to temporarily avert govt shutdown
* Nonfarm payrolls report seen showing 200,000 new jobs in Nov
* British PM May readies dawn call for Brexit talks with EU
By Lisa Twaronite
TOKYO, Dec 8 (Reuters) - Sterling rose while the euro edged down on Friday, as traders waited to see if British Prime Minister Theresa May has finally clinched an elusive deal with Irish and EU officials on how they would run their post-Brexit Irish land border.
The U.S. dollar was higher against a basket of currencies, on track for a weekly gain, as the passage of a bill to temporarily extend U.S. government funding raised investors' optimism that a tax reform bill would also pass.
The leader of the Northern Irish party which props up May's government negotiated through the early hours about the post-Brexit Irish land border, a source in the party told Reuters on Friday. urn:newsml:reuters.com:*:nL9N1NR00A
An agreement would remove the last obstacle for opening free-trade talks with the European Union. May is likely to meet European Union chief executive Jean-Claude Juncker before dawn (0600 GMT) in Brussels. urn:newsml:reuters.com:*:nL8N1O80BZurn:newsml:reuters.com:*:nL8N1O80E7
The euro inched down 0.1 percent to $1.1761EUR= , around its lowest levels since Nov. 22. It was on track to shed 1.1 percent for the week, but is still up nearly 12 percent so far in 2017.
Sterling was up 0.3 percent at $1.3512GBP= , pulling away from its overnight low of $1.3320.
Forex traders were also awaiting the closely watched U.S. non-farm payrolls report later in the day, which is expected to show 200,000 new jobs were created in November, according to a Reuters poll.
The dollar index, which gauges the greenback against a basket of six major rivals, was slightly higher on the day at 93.830 .DXY , up 1 percent for the week. But it was still down 8.2 percent for the year, a period plagued by U.S. policy uncertainty.
Removing one major stumbling block for the dollar, the U.S. Congress on Thursday passed legislation to temporarily fund the government through Dec. 22, beating a Friday midnight deadline. The bill will be sent to President Donald Trump to sign. urn:newsml:reuters.com:*:nS0N1MS01X
U.S. Senate Republicans agreed to talks with the House of Representatives on sweeping tax legislation on Wednesday, amid early signs that lawmakers could bridge their differences and agree on a final bill ahead of a self-imposed Dec. 22 deadline. urn:newsml:reuters.com:*:nL1N1O61VT
"The market action this week has mostly been drawing cues from Washington," said Bill Northey, chief investment officer at the private client group of U.S. Bank in Helena, Montana.
"But from an economic perspective, as we start to look at the real economy, we will get one of the first 'clean reads' on employment," he said, referring to a jobs report in which the impact of the year's hurricanes is no longer a factor.
The number of Americans filing for unemployment benefits unexpectedly fell last week to 236,000, data showed on Thursday.
Fed funds futures prices show that investors expect the U.S. central bank to hike rates at its Dec. 12-13 meeting, with investors now focused on how many more hikes to expect in 2018.
"Speculators may think today is a good day to have dollar long positions, and buy the dollar on dips, ahead of the U.S. employment data, and with the Fed expected to hike next week," said Masashi Murata, senior currency strategist at Brown Brothers Harriman.
Against its Japanese counterpart, the dollar was 0.3 percent higher at 113.38 yen, trading at its highest levels since mid-November and up 1 percent for the week. It was still down 3.2 percent for the year.
Investors had a muted reaction to upbeat Japanese economic readings on Friday, including revised data that showed the economy grew an annualised 2.5 percent, twice as fast as originally estimated in the third quarter, thanks to big gains in capital expenditure. urn:newsml:reuters.com:*:nL3N1O72AF
But regional sentiment got a lift from stronger-than-expected Chinese trade data showing exports surged 12.3 percent in November from a year earlier, more than double the forecast, while imports climbed almost 18 percent. urn:newsml:reuters.com:*:nB9N1NY01F
Bitcoin was down 9.8 percent on the Bitstamp exchange at $14,965.00, after notching a record high of $16,666.66BTC=BTSP . It was up more than 30 percent for the week, as investors debated about whether the cryptocurrency was in a bubble that was about to burst. urn:newsml:reuters.com:*:nL8N1O74OD
(Reporting by Lisa Twaronite; Editing by Eric Meijer & Shri Navaratnam) ((firstname.lastname@example.org; +81 3 6441 1870; Reuters Messaging: email@example.com))
Keywords: GLOBAL FOREX/