* Yen near 15-yr high on dlr;Swissie near record peak vs euro
* 1-week dlr/yen risk reversal puts premium on dollar calls
* US payrolls data in focus,median forecast of 100,000 fall
By Hideyuki Sano
TOKYO, Sept 3 (Reuters) - The euro and high-yielding
currencies held firm on Friday after an improvement in U.S.
housing and jobless claims data bolstered investor appetite for
risk ahead of key U.S. jobs data due later in the day.
Still, reflecting simmering worries about a slowdown in the
U.S. and global economies, the yen was locked near a 15-year
high against the dollar and the Swiss franc hovered near a
record peak against the euro.
The two low-yielding currencies tend to be favoured when
investors want to avoid losses rather than seek higher returns,
despite efforts by their governments to stem currency strength.
"Market players have been building up positions for some
time to brace for a weak U.S. recovery. So I guess that any
upside surprise in the payrolls data could move the market,"
said Daisuke Karakama, market economist at Mizuho Corporate
Bank.
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PDF on Japan's yen dilemma: http://r.reuters.com/nef47n
Q+A-Will Japan intervene? []
Nonfarm payrolls preview graphic:
http://r.reuters.com/bup98n
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The euro changed hands at $1.2827 <EUR=>, flat on the day
and within sight of this week's high of $1.2856 hit on
Wednesday.
Positive news on the U.S. economy and rises in global shares
have tended to help the euro and higher-yielding currencies more
than the dollar in recent months, as investors increasingly see
the greenback as a funding currency for investments on
expectations of a prolonged period of near zero rates in the
U.S.
The next target for the euro was around $1.2873 -- a 38.2
percent Fibonacci retracement of its fall from its August peak
around $1.3334 to its August low near $1.2588. The target after
that would be $1.2923, touched on Aug. 18.
Pending U.S. home resales rose unexpectedly in July and new
claims for unemployment insurance fell for a second straight
week, which, together with upbeat manufacturing data on
Wednesday, eased the gloom over the economy.
Dollar/yen stood at 84.25 yen per dollar <JPY=>, down
slightly on the day and not far from the 15-year low of 83.58
yen hit late last month.
"There are said to be some stop-losses and option triggers
around 83.50. So it could get ugly if the dollar/yen hits that
level after the payroll data," said Teppei Ino, an analyst at
Mitsubishi-Tokyo UFJ Bank.
While the yen's persistent strength -- which comes despite
Japan's own economic problems such as low growth and high debt
-- may suggest investors are positioned for poor U.S. payroll
figures, there are also some signs of opposite moves to prepare
for positive surprises in the data.
Either way, the yen could trim its gains towards the end of
New York trade as some players are likely to book profits on the
Japanese currency's rise ahead of a three-day weekend in the
U.S., traders said. U.S. financial markets will be closed on
Monday for the Labor day holiday.
RISK REVERSALS
There has been some demand for dollar/yen calls with strike
prices around 85.50-86.00 yen this week, which could be attempts
to gain on a possible jump after the jobs data, or even in the
event of intervention.
Reflecting these moves, one-week dollar risk reversals
<JPSWRR=GFI> show the price of dollar calls is on par with, or
slightly higher than, dollar puts.
That is unusual -- it has happened only once in the last two
years -- as dollar/yen risk reversals are almost always skewed
in favour of dollar puts because of Japanese exporters' constant
needs to hedge against falls in the dollar.
Traders are also getting cautious about bidding the yen too
much after Japanese ministers said they could take action --
normally a code word for intervention -- to stem the yen's
strength since late last week.
But many traders have doubts over whether Tokyo will step
into the forex market now given that Tokyo could have trouble
convincing other G7 members about the need to intervene at a
time when they are calling on China to make the yuan <CNY=CFXS>
more flexible to ease global imbalances.
A sharp drop in dollar/yen, such as 1 to 2 percent or more
in a single day towards the 80 yen level and below, is seen as
the most likely scenario that would prompt Japan to stick its
neck out and buy dollars.
Thus many traders expect the market to test the willingness
of Japan to intervene, especially if the U.S. payrolls data
comes in weaker than expected.
Economists expect a decline of 100,000 jobs overall, and a
rise of 41,000 private-sector jobs in August. []
While better-than-expected figures would lift investor risk
appetite, some market players also say they could diminish
expectations of more easing by the Federal Reserve, possibly
boosting U.S. bond yields. That in turn could help the dollar.
The Swiss franc traded at 1.2985 franc per euro <EURCHF=R>,
not far from a record high of 1.2850 hit earlier this week. The
Swiss central bank intervened in markets earlier this year to
curb the franc's rise but has had little success.
Against the dollar, the Swiss currency stood at 1.0125 franc
per dollar <CHF=>, near a nine-month peak of 1.0065 marked
earlier in the week.
The Australian dollar, which boasts the highest yield among
major currencies, traded at $0.9081 <AUD=D4>, after having risen
$0.9122 on Thursday, its highest in about three weeks.
(Additional reporting by Rika Otsuka; Editing by Joseph Radford
and Chris Gallagher)
