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Dollar climbs vs Yen; investors look to US jobs data

NEW YORK - The dollar climbed against the yen on Monday ahead of the delayed release of the U.S. government's September jobs report, with some investors expecting that the data could revive debate about when the Federal Reserve will scale back monetary stimulus.

The release of the September labor market data on Tuesday is more than two weeks late after the U.S. debt crisis resulted in a 16-day partial shutdown of the government. The shutdown is expected to have inflicted enough damage to the economy that markets have concluded the Fed could delay plans to trim its bond buying for several months.

The dollar had been under pressure since the U.S. debt crisis flared, but the near-term focus was on the September jobs report. Economist forecast that 180,000 jobs were created in September, while the jobless rate is expected to have remained steady at 7.3 percent.

If the data is solid, then speculation over whether the Fed can taper this year is likely to return, injecting some volatility in the currency market.

"For now all eyes will turn to U.S. nonfarm payrolls data tomorrow with markets anticipating a print near the 180K level," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. "If the numbers are close to expectations the greenback could see a relief rebound as the week proceeds."

The dollar rose 0.5 percent against the yen to 98.14 yen , close to a near three-week high of 99.00 yen set last Thursday.

The dollar index was up 0.1 percent at 79.698, still not far from a trough of 79.478 touched on Friday, its lowest point since February.

While a majority of market players expect the Fed will begin reducing stimulus only next year, a few analysts still believe tapering could start in December.

Those expectations may get a boost if the slew of upcoming U.S. data, including the jobs report, shows the economy gained momentum despite the fiscal stalemate that took the United States close to default.

Other analysts cautioned that the nonfarm payrolls report may have little impact, if any.

"The Fed cited U.S. fiscal gridlock as a reason to keep QE3 in place in September, and we find that the manifestation of those fears into reality in October will warrant a hold irrespective of tomorrow's NFP," said Christopher Vecchio, currency analyst, at FXCM-owned in New York.

Chicago Federal Reserve President Charles Evans said on Monday it will be "tough" for the Federal Reserve to have sufficient confidence in the strength of the U.S. recovery by its meeting in December to start scaling back the Fed bond-buying campaign.

The euro was down 0.1 percent at $1.3675, though not far from an eight-month high of $1.3703 touched on Friday, almost matching the 2013 peak of $1.3711.