NEW YORK, Sept 4 (Reuters) - The yen fell on Friday after news that U.S. employers cut fewer jobs than expected in August, reinforcing recent data pointing to an economic recovery and dimming safe-haven demand for the Japanese currency.
Major currencies see-sawed earlier as traders said the jobs data was a mixed bag, with light trading ahead of the U.S. Labor Day holiday adding to volatility.
The U.S. economy cut 216,000 jobs in August, while the unemployment rate rose to 9.7 percent, the Labor Department said on Friday. Analysts had expected nonfarm payrolls to drop by 225,000 and the unemployment rate to rise to 9.5 percent. For more see [ID:nL4577554].
"I think it's a little bit mixed in terms of the number and that's fairly evident from the market's reaction afterwards," said Camilla Sutton, senior currency strategist at Scotia Capital in Toronto.
"On the one side is that the unemployment rate climbs significantly higher and that just keeps fears alive that the unemployment rate is still moving higher and will remain high for a longer period of time. However, the payrolls number ... shows that the pace of job losses has declined," she added.
In midafternoon trading in New York, the dollar was up 0.4 percent against the yen at 92.98 yen JPY=, after hitting a session low of 92.26 yen.
The euro rose 0.4 percent to $1.4313 EUR=, near the session high of $1.4327, and against the yen was up 0.8 percent at 133.10 yen EURJPY=R.
"When the dust settles on nonfarm payrolls, it's positive for the high yield currencies by boosting risk appetite," said Kathy Lien, director of currency research at GFT Forex.
The yen also fell against other major rivals, with sterling up 0.8 percent GBPJPY= and the Australian dollar up 1.8 percent AUDJPY=.
The dollar fell 0.3 percent against the yen over the last five trading sessions, its fourth straight weekly decline. It has lost 4.8 percent in the last four weeks. It lost 6.1 percent in the four weeks to July 12.
For the week. the euro was little changed against the dollar.
CANADIAN DOLLAR RALLIES
The August payrolls number followed U.S. data on the manufacturing and sectors earlier this week, supporting the view that the recession is coming to an end, although the outlook for a recovery remained uncertain.
"The economy needs to generate jobs, and until we get near zero or go positive, it's still a tremendous drag on the economy," said Joseph Trevisani, senior market analyst at FX Solutions in Saddle River, New Jersey. "The evidence of what's going on is that we're seeing only a very slow change."
Uncertainty about the global economy may lead to a pullback in risk-seeking, benefiting the dollar and yen in the coming months, said Brian Kim, currency strategist at UBS in Stamford, Connecticut.
Scotia's Sutton said the price of gold is providing interesting indications of risk appetite. "There's been a dramatic move higher in gold," she said. "There're many who think that's really indicating that risk aversion is about to jump higher, which would be bad for equities and good for the U.S. dollar."
The Canadian dollar rallied, with the U.S. currency falling 1.6 percent to C$1.0850 CAD=, according to Reuters data, buoyed by an unexpected rise in employment in Canada in August. [ID:nOTT001697]
Investors also looked ahead to a meeting in London this weekend of finance ministers from the Group of 20 rich and developing nations. G20 policymakers will promise to keep economic support packages in place until recovery is certain. [ID:nLQ516726] (Additional reporting by Steven C. Johnson and Wanfeng Zhou; Editing by James Dalgleish)
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