The yen fell broadly on Friday, following a slide in Tokyo shares, while the dollar traded in tight ranges elsewhere ahead of a labour market report expected to provide new clues about the U.S. interest rate outlook. The Nikkei share average's 1.47 percent drop <.N225> on the day pushed the yen down 2/3 of a percent against the dollar and euro by early European trade. The yen was surrendering gains made after a stronger than expected quarterly tankan survey this week. "The yen has been supported by strong foreign buying of Japanese stocks so a setback for stocks is bad news for the yen," said Aziz McMahon, currency strategist at ABN AMRO. "If you're looking for a currency that is leveraged to the performance of the stock market, it is the yen." Meanwhile, the U.S. employment report at 1230 GMT was looming, with forecasts for an increase in non-farm payrolls of 250,000 in June, compared with 248,000 in May. Economists expect the unemployment rate to stay unchanged at 5.6 percent.
At 0742 GMT, the yen traded at 108.96 per dollar and 132.55 per euro . The euro traded little changed on the day at $1.2158 per dollar and the greenback also traded fairly flat against sterling and the Swiss franc. At 0900 GMT, euro zone producer prices are expected to show a rise of 0.5 percent for May versus 0.4 percent in the previous month. The year-on-year rate is forecast at 2.2 percent versus 1.4 percent. U.S. President George W. Bush makes a speech on the U.S. economy at 1455 GMT in Washington, following this week's widely anticipated quarter-point rise in U.S. interest rates to 1.25 percent.
'MEASURED' TIGHTENING
After the Fed pushed up its key interest rate for the first time in four years, the market's focus shifted to the pace of future rate hikes. The Fed reiterated its stance that it would likely be "measured" in future tightenings, though the market was still mulling over the wording. "'Measured' can be interpreted in a variety of different ways, which is probably why they chose the word in the first place. It's a very 'Greenspanish' word," said Naomi Fink, a senior currency analyst at BNP Paribas in Tokyo. Financial markets have already priced in several more quarter point rate rises later in the year. Unemployment figures are regarded by the market as a key gauge for the U.S. central bank as to whether the economy has picked up enough to warrant higher rates. "The Fed is looking for a sustainable way to hike rates, so this is going to depend on, first of all, further jobs being added and then, secondly, wage inflation," said Fink.///