The yen slipped to one-week lows versus the euro and the dollar on Friday as risk aversion abated and the focus returned to economic fundamentals and interest rate differentials ahead of a key U.S. jobs report. Stock markets stabilised after steep falls last week had made investors across the board less willing to hold risky positions. In the currency market, the abating risk aversion led some to rebuild risky carry trade positions of borrowing in low yielders like the yen to fund purchases of higher return units. "We are seeing gradual unwinding of nervousness. The yen is suffering somewhat, consistent with carry trades being put back on. It seems to be the case that equity volatility retraces from the peak and risk appetite is gradually rebuilt," said Jeremy Stretch, market strategist at Rabobank. The focus is turning to the U.S. non-farm payrolls data at 1330 GMT, which is expected to show 100,000 jobs were created last month. "If we get a number close to 100,000 we will sustain the dollar and see the market in the current range," Stretch said. А week-long rush to cut positions in risky assets unleashed a sharp unwind in carry trades that sent the yen soaring last week for its biggest weekly rise against the euro since August 2003. Whether the relative calm which returned to markets towards the middle of this week will prevail, or whether it will be followed by a fresh bout of carry trade unwinding hinges in part on the U.S. jobs report. The forecast for the non-farm payrolls ranges from 40,000 to 175,000 Steven Pearson, chief currency strategist at HBOS Treasury Services, thinks the dollar could gain regardless of the jobs number. "An out-turn to the upper end of the range of expectations is likely to give the dollar some support as the Fed easing expectations are scaled back," he said in a note to clients. "Conversely any dollar sell-off on a very weak payroll out-turn will be tempered if risk assets start to give way due to broader growth concerns, although in this instance dollar/yen falls. In essence both wings of the distribution of payroll outcomes will generate dollar gains against most developed market currencies." The dollar has suffered against most major currencies as market players look for the Federal Reserve to respond to weaker growth by cutting interest rates from the current 5.25 percent as soon as mid-year. Several Fed policymakers including Susan Bies, Jeffrey Lacker and Donald Kohn are due to speak later on Friday.