Dollar off 3-month high vs yen ahead of US jobs data

TOKYO, June 1 (Reuters) The dollar hovered below a three-month high against the yen on Friday as investors await a raft of U.S. data including a monthly payrolls report later in the session.

The jobs data will provide more clues on whether the Federal Reserve will keep rates steady at the current 5.25 percent, after a strong report on regional U.S. business activity on Thursday reinforced such views and gave a boost to the dollar.

Traders said the dollar has a chance to extend its gains above 122 yen if the jobs data is healthy, but some analysts said the market may have already priced in a strong figure and dollar-buying may not last long.

''I think the jobs data itself is unlikely to provide a positive surprise to the market,'' said Osamu Takashima, chief analyst at the Bank of Tokyo-Mitsubishi UFJ.

The dollar was drifting sideways at 121.70 yen, after climbing as high as 121.99 yen in the previous session, the highest since mid-February. Traders eye 122.20 yen, a 4-1/2-year high struck in January.

The euro was little changed at $1.3455, remaining within a sight of a seven-week low of $1.3406 hit this week.

For the May U.S. non-farm payrolls report, economists forecast an increase of 130,000 jobs, compared with 88,000 jobs created in April. The unemployment rate is seen at 4.5 percent, unchanged from the previous month.

''The market may be more sensitive to a weaker figure after ignoring another employment report by the ADP which was below forecast,'' said Masafumi Yamamoto, currency strategist at Nikko Citigroup.

An economic derivative auction produced an implied market forecast of a gain of 121,200 jobs in May, slightly below the forecast of Wall Street economists polled last week.

Other economic indicators due on Friday include the May manufacturing index by the Institute for Supply Management and data on April personal consumer expenditures and consumer confidence.

RISING STOCKS HELP CARRY TRADES Traders said greater risk appetite, backed by a rise in global stock markets as Chinese shares rebounded after a sell-off, encouraged investors to resume carry trades in which low-yielding currencies like the yen are borrowed to fund investments in higher-yielding currencies and assets.

The single European currency steadied at 163.80 yen, staying near its record high of 164.29 hit on Tuesday.

The yen hit its lowest levels in 15 years against the Australian dollar and 17 years against the New Zealand dollar after sliding to a 15-year low against the Canadian dollar in the previous session.

The Nikkei average rose 0.6 percent to hit its highest in three months after the S&P 500 stock index closed at a record high for the second day in the U.S. on Thursday.

REUTERS SBC PM0846