The dollar slipped from a six-week high against the yen on Friday as the market awaited the monthly US jobs report later in the session for clues on whether the Federal Reserve will keep interest rates steady.
The signal from European Central Bank President Jean-Claude Trichet that a rate rise to 3.25 percent is likely in October did little to give the euro a boost on Thursday, with many investors already anticipating such a move.
For the past few weeks the dollar has put in a mixed performance, strengthening against low-yielding currencies like the yen but losing ground to higher-yielding ones such as the New Zealand dollar, which struck a new six-month high.
The yen has suffered the most in the hunt for yield, hitting an all-time low against the euro and an eight-year trough versus the pound and Swiss franc as a slew of soft data has reinforced expectations for the Bank of Japan to lift rates slowly.
"Carry trades have been very popular," said Rick Lloyd, head of currency trading at ABN Amro in Sydney. The BoJ raised overnight rates for the first time in six years in July, but since then officials have stressed that future increases will come only gradually after the hike to 0.25 percent, easily the lowest among major currencies.
The US payrolls report for August is due at 1230 GMT and is expected to show employers added 120,000 jobs on the month, suggesting modest but steady growth that would likely make the Fed comfortable leaving rates at 5.25 percent.
"The market has pretty much factored in the possibility that the Fed will not raise rates for a while," said Fumihiko Kawano, forex manager at Nomura Securities.
Trading was expected to stay quiet until the release of the employment report and then die down quickly, with US markets closed on Monday for the Labour Day holiday. The dollar edged down to 117.25 yen after having reached 117.50 on Thursday, the strongest since late July.
The euro also slipped to 150.15 yen retreating from the peak of 150.73 yen hit the previous session - its best since the single European currency's launch in 1999.