* Dollar hits 7-mth high vs yen; recovers ground vs euro
* Japanese investors seen looking for returns abroad in Q2
* U.S. ISM data due; focus on Friday's jobs data
(Updates prices, adds comment, data changes byline)
By Steven C. Johnson
NEW YORK, April 1 (Reuters) - The U.S. dollar hit a
seven-month high against the yen on Thursday as Japanese
investors rang in Japan's fiscal new year by moving funds
abroad into higher-yielding currencies and assets.
The greenback also rose against the euro ahead of Friday's
U.S. payrolls report. Economists forecast the economy added
190,000 jobs last month, an outcome that would likely lift the
dollar and boost expectations for higher U.S. interest rates.
Strong manufacturing data from Europe and Asia boosted risk
appetite and the view that recovery is taking hold in economies
around the world, keeping dollar gains in check against other
major currencies, including the pound and Canadian dollar.
U.S. manufacturing data for March is due at 10 a.m. (1500
GMT).
"We had a slew of nice upside surprises from manufacturing
data in China, Europe, the UK ... so that's a good start to the
month, and if we get a good payrolls number tomorrow, that's a
dollar-positive," said Matthew Strauss, senior strategist at
RBC Capital Markets in Toronto.
A spike in risk appetite also encouraged Japanese investors
to sell the yen as the new fiscal year gets underway.
The dollar rose as high as 93.89 yen <JPY=>, according to
Reuters data, its best level since August 2009. It was last at
93.74 yen, up 0.3 percent on the day.
The euro slipped 0.2 percent to $1.3489 <EUR=>, as
Wednesday's quarter-end buying faded and analysts continued to
fret about a debt crisis in Greece.
Traders brushed off a Bank of Japan survey showing a widely
expected improvement in business sentiment during the March
quarter. For details see []
Instead, investors appeared eager to put money into
overseas currencies and assets that offer higher returns than
those in Japan, where interest rates are seen staying low
indefinitely. The euro also hit a two-month high at 126.62 yen
<EURJPY=>.
Sterling hit a five-week high against the euro of 88.51
pence <EURGBP=D4>, with traders citing an opinion poll showing
the opposition Conservatives could gain a majority in the
upcoming election, diminishing UK political uncertainty.
The pound rose 0.4 percent to $1.5238 <GBP=>, while the
dollar fell 0.4 percent to 1.0109 Canadian dollars <CAD=>..
A strong Swiss purchasing managers' index boosted the franc
to 1.4178 per euro <EURCHF=R>, its best showing since the euro
was launched in 1999. []
The New Zealand dollar <NZD=D4> fell 0.6 percent to $0.7054
after the International Monetary Fund said the currency was
overvalued and the government needed to cut costs and shrink
debt. []
Optimism on the U.S. jobs picture was tempered slightly a
day ago when a private report showed the economy unexpectedly
shed 23,000 private-sector jobs last month.
Omer Esiner, a senior analyst at Travelex Global Business
Payments in Washington, said that pushed an index of the dollar
against major currencies off 10-month highs seen last week.
The dollar "is still well within familiar ranges," he said.
"In fact, it's at the lower end of its recent ranges ahead of
the jobs number. The support is coming from positioning ahead
of this jobs data."
(Additional reporting by Gertrude Chavez-Dreyfuss in New
York and Jessica Mortimer in London; Editing by Padraic
Cassidy)
