MUMBAI, May 5 (Reuters) - The Indian rupee this week will be guided by the U.S. jobs report, while bond yields are expected to consolidate after declining for three consecutive weeks.

Data points related to the U.S. labour market are one of the key variables that investors monitor to gauge whether the U.S. Federal Reserve is done with its rate hikes.

The U.S. jobs report released on Friday, the first major data released after Fed the hinted at a pause in the rate hike cycle, showed that the U.S. economy added 253,000 jobs last month and the unemployment rate unexpectedly declined to 3.4%.

Economists polled by Reuters had expected 180,000 job additions. Wages grew by 0.5% against a 0.3% forecast from the economists.

Revisions were negative, however, and the three-month average pace stands at 222,000 jobs, down from 345,0000 previously reported, according to Goldman Sachs.

On the impact of the jobs data on the Federal Reserve outlook, Goldman Sachs said it continues to expect a pause at the June meeting because of tighter credit conditions and the restrictive level of the funds rate.

Last week, the rupee was largely unchanged at 81.80 to the U.S. dollar, likely dollar purchases by the Reserve Bank of India (RBI) offset foreign inflows into the domestic equity market.

This week again "it will be a tussle" between the positive near-term momentum (for rupee) and the RBI, a trader said.

Meanwhile, Indian government bond yields may consolidate, with the benchmark bond yield moving in the 6.98%-7.12% band through the week.

The benchmark yield ended at 7.0140% on Thursday, and fell 11 basis points (bps) lower, after easing by seven and four bps in the previous two weeks. The yield had briefly dipped to 6.9786%, the lowest in 13 months for the 10-year part of the curve.

Several bond market participants recommended booking profits at the dip, as they did not expect large investor demand at current levels and as the domestic market does not see the RBI cutting rates at least till December.

And while market participants have begun expecting rate cuts from the Fed as early as next quarter, IDFC First Bank expects the Fed to remain on pause for the remainder of 2023.

"The threshold to cut policy rates remains high, given that Core PCE inflation (Fed’s preferred metric) at 4.6% Y/Y in March 2023 remains higher than the 2% target," said India economist Gaura Sen Gupta.

"Moreover, core services inflation has not shown much improvement despite the unprecedented pace of rate hikes."

The RBI had surprised markets by holding the key lending rate at 6.50% on April 6, going against expectations of a 25-bps hike. KEY EVENTS: • U.S. April CPI - May 10, Wednesday (6:00 p.m. IST) • U.S. week to May 1 - initial jobless claim - May 11, Thursday (6:00 p.m. IST) • India March industrial output - May 12, Friday (5:30 p.m. IST) • India April CPI inflation - May 12, Friday (5:30 p.m. IST) (Reporting by Nimesh Vora and Dharamraj Dhutia; Editing by Janane Venkatraman)