* Dollar wobbles after ADP jobs data but recovers vs yen
* Japanese selling drives yen to 3-month low vs dollar
* Euro supported by month-end demand, fiscal woes linger
* Dollar on track for best quarter in a year
(Recasts, updates prices, adds detail)
By Steven C. Johnson
NEW YORK, March 31 (Reuters) - The dollar fell against the
euro on Wednesday but hit a three-month high against the yen
and remained on track for its best quarterly performance in a
year on the view that the U.S. economy continues to improve.
The dollar rose as high as 93.60 yen overnight, its highest
level since early January, as investors rang in the start of a
new Japanese fiscal year by selling the Japanese currency.
The euro also gained on the yen, rising 1.4 percent to
126.40 yen <EURJPY=R>, its highest level since early February.
Expectations that the Federal Reserve will raise interest
rates from record lows before central banks in Japan and Europe
do so also boosted the dollar, though it wobbled after a report
showed a surprise decline in U.S. private-sector jobs in March,
sparking concern about the pace of U.S. recovery.
But after falling briefly below 93 yen, the dollar
rebounded by midday, with analysts expecting a key government
payrolls report on Friday to show the economy added 190,000
jobs in March, albeit aided by temporary government hiring for
the 2010 U.S. census.
Private-sector employers cut 23,000 jobs this month, ADP
Employer Services reported. Economists polled by Reuters had
expected a gain of 40,000 jobs. For more, see [].
"The negative figure was a bit jarring. People have been
focused on private hiring because it should remove the noise of
temporary census-related hiring," said Brian Kim, currency
strategist at UBS in Stamford, Connecticut.
"But this data is less reliable when the trend is changing,
and we do seem to be an inflection point," he said. "The trend
of fading weakness in payrolls is still there."
The dollar was last up 0.6 percent at 93.39 yen <JPY=>,
near a session peak, after dipping to 92.76 yen after the ADP
report. The euro rose 0.8 percent to $1.3522 <EUR=>, boosted
partly by quarter-end demand, though traders said further gains
were likely to be slight as markets remained worried about
Greece's debt woes.
The spread between Greek and German 10-year benchmark bonds
widened on Wednesday, and Moody's Investor's Service downgraded
its debt rating on five Greek banks [].
"We could see a (euro) move higher from here, with a
possible move to recent highs around $1.3540-50, but whether
that can be sustained is questionable," said Brian Dolan, chief
strategist at Forex.com in Bedminster, New Jersey. "The news
out of Europe is still pretty bad."
Sterling rose 0.7 percent to $1.5185 <GBP=> while against
the Swiss franc the dollar fell 1.2 percent to 1.0530 francs
<CHF=>.
Traders said Japanese banks, hedge funds and life insurers
remained heavy dollar buyers after the greenback broke above 93
yen. The Japanese currency also hit a five-week low against the
pound.
"The fiscal year-end is done and dusted and we are
beginning to see portfolio outflows from Japan," said Paul
Mackel, HSBC's director of currency strategy. "We particularly
like sterling against the yen and target a move towards 149
yen."
Between January and March, an index measuring the dollar
against six major currencies was up 4 percent <.DXY>, its best
quarterly performance since the first quarter of 2009. The euro
lost 5.5 percent against the dollar this quarter, while
sterling fell 6 percent.
(Additional reporting by Naomi Tajitsu in London, Editing by
Leslie Adler)
