G3 currencies subdued ahead of U.S. jobs test

SYDNEY (Reuters) - Major global currencies marked time early in Asia on Friday, as investors retreated to the sidelines ahead of a U.S. jobs report that could reinforce the recent improvement in risk sentiment, or unravel it.

Markets were also wary of possible official intervention to weaken the yen and Swiss franc, after Japanese and Swiss authorities indicated they were unhappy with their currency's strength.

The dollar bought 76.18 yen, having slid from 78.28 on Jan 25. It was within easy reach of a record low around 75.31 set on Oct 31, when Japan launched a massive intervention to weaken its currency.

Meanwhile, the euro has steadily drifted towards the 1.20 franc level that the Swiss National Bank said it would defend at all cost. It was last at 1.2042 francs.

SNB interim head Thomas Jordan was reported by the Financial Times on Thursday as saying the central bank will enforce the minimum Swiss franc exchange rate against the euro "with the utmost determination."

Against the greenback, the single currency stood at $1.3142, little changed from late New York levels. It drifted between $1.3083/$1.3196 on Thursday, well within Wednesday's range in what is known as an inside trading day.

This usually indicates a lack of market conviction, not surprising given the looming U.S. jobs report and no new developments on Greece's debt swap deal (PSI).

"We continue to expect any euphoria on a PSI announcement to produce a knee-jerk spike higher in EURUSD and which may yet take out the 1.3240-50 area above which we may witness a bigger capitulation by euro shorts," said Ray Attrill, strategist at BNP Paribas.

"Yet we look to fade any such spike and expect that tensions over whether PSI will likely entail a coercive deal involving CDS triggers, and over whether the whole package will slot into place well in time for the March 20 bond-redemption deadline, to harm euro sentiment once more."

Greek officials have said repeatedly that a deal is around the corner, and European Union Economic and Monetary Affairs Commissioner Olli Rehn reiterated on Thursday that the debt swap deal could be agreed by the end of the week.

The single currency was on track to end the week slightly in the red, pausing after a 2.8 percent rally the previous week.

A subdued overnight session was also reflected in the dollar index .DXY, which was little changed at 78.975, not far off an eight-week low of 78.623 plumbed on Wednesday.

The dollar has come under renewed pressure since the Federal Reserve last week pledged to keep interest rates low for longer, making it attractive for investors to use the greenback as a funding currency for carry trades.

Testifying before Congress, Fed Chairman Ben Bernanke on Thursday said Europe's financial crisis still threatened the U.S. recovery, and said the Fed would do everything it can to ward off damage.

The Fed's stance has helped invigorate higher yielding commodity currencies such as the Australian dollar. It hit a five-month high of $1.0758 on Thursday and last stood at $1.0704.

The Aussie is flirting with resistance in the $1.0750/80 area and a break there could pave the way for another test of the 29-year peak of $1.1081 set in July.

The highly anticipated U.S. jobs report, due at 1330 GMT, is expected to show the U.S. economy generated 150,000 jobs in January, keeping the unemployment rate steady at 8.5 percent.

Traders said any upside surprise would boost risk sentiment further, but any disappointment could also add to the case for more stimulus from the Fed. Both outcomes could be bad news for the greenback.

Apart from HSBC's China services PMI data at 0230 GMT, there is little in the way of major Asian economic data that could excite markets.

(Additional reporting by FX analyst Krishna Kumar; Editing by Wayne Cole)