* Dollar struggles before U.S. payrolls, euro edges up
* Markets positioned for weak reading of U.S. jobs market
* Median forecasts for 100,000 job losses
(Updates prices, adds quote)
By Naomi Tajitsu
LONDON, Sept 3 (Reuters) - The dollar struggled on Friday
while the euro crept up before U.S. employment data which is
expected to show more job losses and may fuel dollar selling but
also heighten risk aversion.
Reflecting subdued appetite due to worries about a slowdown
in the U.S. and a stuttering global recovery, the yen was locked
near a 15-year high against the dollar and the Swiss franc
hovered within range of a record peak against the euro.
Data due at 1230 GMT is expected to show U.S. non-farm
payrolls fell 100,000 in August, following a loss of 131,000 in
July. Figures earlier in the week showed a surprising decrease
in private sector jobs last month.
Currencies held in a range as investors were wary of taking
on big positions ahead of the jobs data. Market participants
said traders were short of dollars heading into the figures.
"If the figure is weak, we would see the dollar being sold
off and the euro would rise, before it all dissipates," said
Paul Mackel, director of currency strategy, at HSBC. "That has
been the kind of reaction that we have been seeing to the past
few data releases from the U.S."
"What will be interesting to see is how dollar/yen trades
despite the outside chance of intervention by the Japanese
authorities."
By 1114 GMT, the euro <EUR=> was 0.1 percent higher on the
day at $1.2839, hovering near a two-week high around $1.2855 hit
earlier in the week. Traders said the single currency's upside
was capped by offers from semi-official European names.
Stop-loss orders seen at $1.2850 were limiting euro moves,
while option expiries later in the day were placed in the
$1.2800-$1.2900 region.
The dollar index <.DXY> was a touch lower on the day against
a basket of currencies at 82.38.
The index has fallen in the past few sessions as
expectations of more quantitative easing in the U.S. gained
ground following a raft of weak numbers. Fed Chairman Ben
Bernanke has said he is prepared to ease monetary policy further
if the U.S. economic slowdown worsened.
"If the figure does not provide a massive surprise to the
upside, it will support the market's view that the Fed will not
raise rates for a very long time," said Ulrich Leuchtmann,
currency strategist at Commerzbank in Frankfurt.
Some in the market said a weak jobs reading may increase
risk aversion, which could drive growth-linked currencies lower.
On the other hand, a better-than-expected number could boost the
Australian <AUD=D4>, Canadian <CAD=D4> and New Zealand dollars.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For an FX Column on U.S. payrolls, click on []
For a graphic on U.S. payrolls: http://r.reuters.com/bup98n
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DOLLAR/YEN UPSIDE RISK?
The U.S. currency <JPY=> inched up to 84.44 yen, but hovered
in range of a 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 in Tokyo.
A weak number could see yields on U.S. Treasuries fall
further and could pressure dollar/yen, traders said.
Traders have cited growing demand for short-dated options to
buy dollar/yen this week, suggesting investors are keen to
protect their short dollar positions against sudden bounces even
though they see the greenback staying weak. []
The euro rose to 0.2 percent to 1.3019 against the Swiss
Franc, but was not far from an all-time low of 1.2850 earlier
this week. The dollar <CHF=> was at 1.0140 francs, up 0.1
percent.
Investors often favour the low-yielding yen and Swiss franc
when they want to avoid losses rather than seek higher returns.
Investors have become cautious about bidding the yen too
much after Japanese ministers said they could take action --
normally a code word for intervention -- to stem yen strength.
(Graphic by Scott Barber, additional reporting by Anirban
Nag, editing by Nigel Stephenson, Ron Askew)
