* U.S. payrolls show unexpected drop in September
* Dollar falls below 82 yen to fresh 15-year low
* Fed's Bullard earlier says more easing not obvious case
(Updates prices)
NEW YORK, Oct 8 (Reuters) - The U.S. dollar slid to a
15-year low below 82 against the Japanese yen on Friday after a
report showed an unexpected drop in U.S. payrolls in
September.
The report bolstered the expectation for further asset
purchases from the U.S. Federal Reserve and the reaction
against the yen was immediate, with the dollar falling to a low
of 81.72 yen on electronic trading platform EBS. For job report
details click []
The dollar also fell sharply against the euro on the jobs
data, but it later recovered some of those losses after
Eurogroup Chairman Jean-Claude Juncker said he was not happy
with the euro's move to $1.4000, a level surpassed on
Thursday.
"The overall change (in payrolls) is really bad and is
probably enough to convince the Fed to engage in quantitative
easing," said Mark McCormick, currency strategist at Brown
Brothers Harriman in New York. "Most are pricing in some $500
billion of easing, and I don't think this really changes that.
I think the Fed still intervenes."
The dollar was last at 81.82 yen on electronic trading
platform EBS <JPY=EBS> <JPY=>, down 0.6 percent on the day.
Investors remained on full alert for intervention by the
Bank of Japan to weaken the yen, given it is trading at levels
stronger than the 82.87 level where the central bank stepped in
on Sept. 15.
"There was no sign of the Bank of Japan in the market yet,
but there's strong support below the 82 yen level and I
wouldn't be surprised to see it bounce if it dips below 82
again today," said Greg Salvaggio, vice president for trading
at Tempus Consulting in Washington.
Japanese Prime Minister Naoto Kan said Japan would take
decisive steps on the strong yen if needed, but added that it
also wanted to cooperate with the G7 and other countries.
[]
EURO FALL
Investors are also wary in case the G7 and IMF meetings
starting in Washington on Friday produce a surprise in the form
of a coordinated front on currencies, as calls have mounted for
global efforts to avoid competitive currency devaluations.
The euro was last little changed against the dollar at
$1.3930 <EUR=EBS> <EUR=> on EBS.
The euro exchange rate against the dollar is too strong at
$1.40, as the dollar does not reflect the economic fundamentals
of the United States, Juncker said on Friday ahead of the
meeting of finance ministers and central bankers of the Group
of Seven most industrialized countries.
"Juncker has turned the market with comments about how he's
not happy with the euro reaching $1.40,' said Michael Woolfolk,
senior currency strategist at BNY Mellon in New York. "This
adds to concern about competitive devaluations, particularly
since foreign exchange will be discussed at official IMF
meetings this weekend."
St. Louis Fed chief James Bullard, a voting member this
year on the Federal Reserve's rate-setting committee, told CNBC
that policymakers face a tough decision at next month's policy
meeting as the economy has slowed but is still bumping along.
[]
Market speculation has increased that the Fed will resume
quantitative easing when it meets on Nov. 2-3 to shore up the
economy. In such a move, the Fed would likely buy government
securities to keep interest rates low and liquidity in the
system.
Bullard did not rule this out, saying more help may be
needed to push up inflation.
The dollar index, a non-traded calculation of the dollar's
performance against a basket of six other major currencies, was
down 0.2 percent at 77.250 <.DXY>, though above an 8-1/2 month
low of 76.906 touched on Thursday. It has support at 76.60, the
index low for 2010 hit in mid-January.
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For PDF on 'currency war' http://r.reuters.com/dyw27p
FX tensions interactive map http://r.reuters.com/jec96p
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(Additional reporting by Vivianne Rodrigues and Steven C
Johnson in London and Jessica Mortimer in London)
(Reporting by Nick Olivari)
