The dollar fell broadly on Friday as cautious comments from Federal Reserve officials soured sentiment towards the greenback ahead of a key U.S. employment report later in the day. Fed Governor Ben Bernanke said on Thursday the U.S. central bank could temporarily halt its tightening cycle if the U.S. economy slowed. He also said there was some slack in the U.S. labour market, fuelling jitters that monthly jobs figures for September, due at 1230 GMT, will come in lower than expectations. Echoing Bernanke, Dallas Fed President Robert McTeer said weak data could force a pause in rate rises and added the widening U.S. current account deficit would require a depreciation in the dollar over time. The dollar slipped three-quarters of a percent to a one-week low of 110.34 yen and was down 0.4 percent against the euro in early European trade, at $1.2334 . Economists in a poll forecast non-farm payrolls would show a rise of 148,000 for September, compared with 144,000 new jobs in August.
Traders said the yen also benefited from renewed speculation that China may revalue the yuan after news U.S. President George W. Bush spoke to Chinese President Hu Jintao by telephone on Thursday on currency issues. Although many traders doubt that China will modify the yuan's peg to the dollar in the near future, if it does revalue, other Asian currencies are likely to move in tandem with the yuan because of their economies' close ties with China. The yen was unfazed by a lower-than-expected reading for Japanese machinery orders in August, which rose 3.1 percent from a month earlier. The euro also showed little reaction to data showing Germany's trade surplus narrowed in August to its lowest level since December. German industrial production figures for August are due at 1000 GMT.///www.reuters.com