MUMBAI, Feb 5 (Reuters) - The Indian rupee could be on the back foot early this week after strong U.S. jobs data prompted a rise in Treasury yields and the dollar, while bond yields may decline, as investors await commentary from the central bank with an expected status quo.

The currency ended slightly higher at 82.9175 against the U.S. dollar on Friday and notched a weekly gain of 0.2% aided by positive sentiment following the presentation of India’s federal budget.

The Indian government said it plans to lower fiscal deficit and gross borrowing in the financial year starting April 1, a move that could boost debt inflows.

The dollar index rose to a seven-week high on Friday after data showed U.S. nonfarm payrolls increased by 353,000 last month, sharply beating economists' expectations for a gain of 180,000. The 10-year U.S. Treasury yield jumped 16 basis points to 4.02%.

The "robust yield rebound may pressure emerging market currencies, including the rupee," Arnob Biswas, head of foreign exchange research at SMC Global Securities said. Biswas expects the rupee to hover in an 82.90-83.20 range this week.

Continued strength in U.S. economic data is also likely to weigh on expectations of early rate cuts by the U.S. Federal Reserve.

"There will be no March interest rate cut (barring a return of financial system stress), but we are sticking with the May rate cut call with 150bp of cuts this year," ING Bank stated in a note.

Meanwhile, India's 10-year benchmark bond yield closed at 7.0555% on Friday, posting the biggest weekly fall in 15 months, as a fiscally prudent budget boosted appetite for government securities.

Market participants expect the benchmark bond yield to trade in a range of 6.98%-7.08% until the monetary policy announcement on Thursday.

New Delhi aims to reduce its fiscal deficit to 5.1% of gross domestic product next fiscal from 5.8% this year.

The government will gross borrow 14.13 trillion rupees ($170.5 billion) in the next financial year, sharply lower than market expectations of 15.60 trillion rupees, and also below this year's borrowing of 15.43 trillion rupees.

Market participants expect a strong rally in bond prices in the coming months on continued foreign inflows ahead of the debt being added to global indexes.

The government's plan to tighten fiscal policy next financial year has not only boosted sovereign bonds but could also push the country's central bank to ease its stance on liquidity, Neeraj Gambhir, group executive and head of treasury, markets & wholesale banking products at Axis Bank said.

Gambhir, however, does not expect the central bank to take any action at its policy meeting this week and to continue to infuse funds via the shorter-duration repos.

KEY EVENTS: ** HSBC India Jan services PMI - Feb. 5, Monday (10:30 a.m. IST) ** U.S. Jan S&P Global services and composite PMI - Feb. 5, Monday (8:15 p.m. IST) ** U.S. Jan ISM non-manufacturing PMI - Feb. 5, Monday (8:30 p.m. IST) ** U.S. Dec international trade - Feb. 7, Wednesday (7:00 p.m. IST) ** India policy rate decision - Feb. 8, Thursday (10:00 a.m. IST) (rates expected to remain unchanged) ** U.S. initial weekly jobless claims week to Jan. 29 - Feb. 8, Thursday (7:00 p.m. IST) ($1 = 82.8850 Indian rupees) (Dharamraj Dhutia and Jaspreet Kalra; Editing by Mrigank Dhaniwala and Janane Venkatraman)