* US payrolls fall more than expected
* US dollar hits 8-month low vs yen, nears 15-year trough
* Euro rises to three-month peak above $1.33
* Sterling nears 6-month peak around $1.60
* Markets worry weak US growth could spark Fed action
(Updates prices)
By Steven C. Johnson
NEW YORK, Aug 6 (Reuters) - The U.S. dollar approached a
15-year low against the yen on Friday and fell against the euro
after data showed the United States shed twice as many jobs in
July as economists expected, adding to worries about recovery.
While U.S. employers did add 71,000 private sector jobs,
that was below forecasts for a 90,000 gain, helping to push the
euro <EUR=> to a three-month high above $1.33. The dollar fell
to 85.03 yen <JPY=>, its lowest level since November and near a
15-year trough beneath 85. Sterling hit a six-month high near
$1.60 <GBP=D4>.
For more on the data, please see [].
The jobs report "is really going to deepen concerns about
the health of the labor market, and that increases the odds of
the Federal Reserve having to implement fresh stimulus measures
to jump start the recovery," said Joe Manimbo, analyst at
Travelex Global Business Payments in Washington. "Nothing in
there to argue for a firmer dollar."
The data also drove two-year U.S. Treasury <US2YT=RR>
yields to the latest in a string of record lows, further
undermining the dollar's yield appeal.
Analysts said things don't look likely to get better for
the greenback ahead of a Federal Reserve policy meeting on
Tuesday. A string of weak U.S. economic data fed speculation
this week that the central bank could renew Treasury and
mortgage bond purchases to jolt the economy back to health.
"It's just not safe to hold dollars. Quantitative easing is
back on the table and it will push yields even lower," said
Douglas Borthwick, head trader at Faros Trading in Stamford,
Connecticut. "There are very few reasons out there to buy it."
WATCHING THE YEN
The dollar was down 0.7 percent at 85.20 yen <JPY=>. It was
was near a 15-year low of 84.81 yen and its all-time trough
below 80 yen, according to Reuters data.
Support around 85 yen has held despite a number of assaults
on the level. But Boris Schlossberg, director of research at
GFT Forex in New York, said it will eventually break, "if not
today, then early next week, as currency traders price in
declining yields in the U.S. bond market."
A dip below 85 yen could increase volatility and push
Japanese officials to try to talk down the yen.
Several lawmakers have warned that action may be warranted
to weaken the yen and restore Japanese trade competitiveness,
though analysts think it would take an extremely rapid rise to
trigger outright intervention.
EURO, STERLING RISE
The euro was last up 0.8 percent at $1.3296 after earlier
hitting $1.3333 <EUR=>, its highest level since May. A close
above $1.3125, the 38.2 percent retracement of the euro's
November-to-June slide, looks likely and, strategists said,
would be a bullish sign pointing to more euro gains.
Sterling <GBP=D4> rose 0.6 percent to $1.5999, its best
showing against the greenback since February. Traders said the
$1.5910 was now seen as support should the pound retreat.
The dollar rose against its Canadian counterpart <CAD=D4>
after data showed Canada's economy shed 9,300 jobs in July,
compared to forecasts for a 15,000 gain. []
(Additional reporting by Nick Olivari and Vivianne
Rodrigues; Editing by Andrea Ricci)
