* Euro resumes declines ahead of U.S. payrolls report
* Yen slips vs dollar as political uncertainty weighs
NEW YORK, June 3 (Reuters) - The U.S. dollar rose broadly
on Thursday as investors debated the outlook for the U.S. labor
market ahead of the key non-farm payrolls report set for
release on Friday and became increasingly risk averse.
The dollar first rose on bets for a strong reading of U.S.
payrolls data but later bearish investors also bought dollars
on risk aversion in case expectations for jobs growth are too
high. The euro touched a session low against the U.S. dollar
and Swiss franc due to technical trading and position
adjustment ahead of U.S. payrolls, dealers said.
The yen fell for a second day versus the dollar due to
political uncertainty in Japan.
"There is a bit of concern about the jobs number with the
bar being set high," said Kathy Lien, director of currency
research at GFT in New York. "There is a strong chance the
non-farm payrolls number could fall short of expectations."
A weekly government reading on U.S. jobless claims and a
monthly report on private-sector jobs released on Thursday
showed signs of support for the U.S. economy. That prompted
analysts to upgrade forecasts for monthly payrolls data.
In mid afternoon trading in New York, the euro was last
down 0.7 percent at $1.2160, near the session low of $1.2153
<EUR=>.
A Reuters poll gave a consensus forecast U.S. payrolls data
would show 513,000 jobs created in May. []
Some economists are anticipating an even stronger figure,
with BNP Paribas upgrading its forecast to an increase of
615,000. U.S. President Barack Obama added to optimism, saying
on Wednesday the report would show strong growth.
[]
The number of U.S. workers filing new applications for
unemployment insurance fell as expected last week, according to
government data. U.S. private employers added 55,000 jobs in
May, according to a private report. For details, see
[] and []
"These reports show the labor market is in fact
stabilizing," said John Doyle, senior currency strategist at
Tempus Consulting, Washington. "Fundamentals here are much
stronger than they are across the pond, so that means interest
rates should go up here first."
But given such lofty expectations for the Friday report,
analysts said caution would be required going into the data
given the heavy bullish positioning.
A sell-off in euro/Swiss franc came simultaneous with the
drop in euro/dollar. Traders said markets took out weak stops
in euro/dollar at $1.2220 and below 1.4100 in euro/swiss.
They added that option expiries in the single currency
between $1.2300 and $1.2200 at 10 a.m. (1400 GMT) may have
helped push the euro lower across the board.
The single currency was last down 0.5 percent against the
Swiss franc at 1.4071 <EURCHF=>.
THE YEN
The dollar was up 0.1 percent versus the yen <JPY=> at
92.31 yen. The euro <EURJPY=R> was down 0.6 percent against the
Japanese currency at 112.28 yen having earlier rallied above
114.00.
The dollar's two-day advance against the yen was the best
two-day move since May 10 at current prices.
Also, with the market speculating Japan's next prime
minister would take a tougher stance in fighting the yen's
strength, traders took this as an opportunity to trim long
positions in the currency.
Finance minister and candidate for ruling party head -- and
the premiership -- Naoto Kan surprised markets earlier this
year by saying he wanted the yen to weaken more and that most
businesses were in favor of a dollar/yen rate around 95 yen.
(Additional reporting by Steven C. Johnson, Gertrude
Chavez-Dreyfuss in New York and Neal Armstrong in London)
(Reporting by Nick Olivari and Vivianne Rodrigues; Editing by
Diane Craft)
