LONDON, Oct 3 - The dollar fell on Friday within half a yen of the three-year lows that saw Japan intervene aggressively this week to weaken the yen, as markets worried a U.S. report may show more labour market stagnation. The September U.S. employment report due at 1230 GMT is forecast to show a loss of 30,000 jobs versus August's loss of 93,000. Unemployment is seen up at 6.2 percent, from 6.1 percent, and likely to remain a key worry for the U.S. economy. The dollar hit three-year lows against the yen on Tuesday but recovered as Japan's Ministry of Finance confirmed it intervened to sell yen. The dollar also hit three-month lows against the euro this week as investors reassessed their views on the U.S. and global economies. "Overall the dollar is under threat. The recovery is not as strong as perhaps people had hoped. Almost every U.S. report disappointed this week," said Chris Gothard, currency analyst at Brown Brothers Harriman. "The payrolls report is a really important number. I think people will have positioned for downside risk."
By 0945 GMT, the dollar fell as low as 110.27 yen within a quarter-yen of three-year lows. At $1.1707 per euro , it was barely more than half a cent firmer from three-month lows around $1.1770. The dollar was below levels against the yen at which Japanese authorities were widely believed to have intervened on Wednesday, following confirmed intervention on Tuesday near 110, seen as the new line in the sand for Japanese authorities. "As we near 110 yen, the market naturally gets anxious about possible intervention," said Junya Tanase, global markets officer at JP Morgan Chase in Tokyo. A chorus of Japanese officials, worried that a higher yen could derail the country's export-led economic recovery, have been warning on a daily basis that volatility in exchange rates was undesirable and Japan would act against it as needed.
U.S. JOBS DATA
The main focus on Friday was the monthly U.S. jobs data, given concerns that a soft labour market would eventually take a toll on consumer spending, the main driver of the U.S. economic recovery over the years. "Economists are expecting a negative jobs number today," said Bilal Hafeez, foreign exchange strategist at Deutsche Bank. "People jostle for position in the run-up to these numbers, and they are getting more mixed in their views on the U.S. economy, whereas two weeks ago they were more optimistic." Also on Friday, the Institute for Supply Management's non-manufacturing survey for September is due at 1400 GMT, forecast to have fallen to 62.5 from 65.1 but still well above the 50 threshold that indicates expansion. A similar survey of euro zone's dominant service sector showed it shifted up a gear last month to its fastest pace since April 2002, as confidence soared and demand rose. The euro zone business activity index rose further above the 50 line that divides growth from shrinkage to 53.6 in September from 52.0 in August, the third month of expansion and above a 52.5 consensus forecast. Earlier, in Tokyo, Japanese Economics Minister Heizo Takenaka said yen strength would not have a major impact in the next six to 12 months from a macroeconomic standpoint. But he added that upbeat economic data, such as Wednesday's "tankan" business survey, must be discounted by taking into consideration the recent surge in the currency.//