TheFXSpot: US Jobs Data Key For Direction; Weak Yen Debated 4  MAR   By Vicki Schmelzer NEW YORK, March 4 - Friday's U.S. non-farm payroll report will likely be skewed by weather-related factors as well as the hiring of census workers, leaving financial market players clamoring for "clean" data instead. By Vicki Schmelzer NEW YORK, March 4 (MNI) - Friday's U.S. non-farm payroll report will likely be skewed by weather-related factors as well as the hiring of census workers, leaving financial market players clamoring for "clean" data instead. "We won't have clean numbers for a long time," traders opined. The median estimate in a Market News International survey of economists is for U.S. non-farm payroll report payrolls to fall by 50,000. Estimates range from -150,000 to +30.000. The U.S. unemployment rate is expected to increase by 0.1% to 9.8%. Estimates there range from 9.6% to 10.0%. In addition to the snow-effects and the addition of census workers, there will be backward revisions to contend with -- which will also weigh in. "We are probably mentally ready to see a small negative number," said Vassili Serebriakov, senior currency strategist at Wells Fargo. A minus 50 reading, with a solid breakdown (components), "would be viewed as a generally positive report," he said. The market has "discounted quite a lot (negative payroll number) already," Serebriakov said, adding, "What will it take to impress?" FX direction will be hard to gauge if February non-farm payrolls are "as-expected," he said. "The dollar tends to benefit from extremes," Serebriakov reminded. The greenback may follow U.S. Treasury yields higher on a widely better-than-expected result and may also rally on safe-haven demand in response to a particularly weak report, he explained. The market wants to see a number that "ex-snow, ex-census" suggests that "economic recovery is still on track," said Bob Lynch, senior currency strategist at HSBC. If Friday's jobs data does nothing to change the market view of the fundamental economic backdrop, "the issues that have dominated the market will continue to take precedence," he said. Euro-dollar was trading at $1.3580 Thursday, after trading in a $1.3552 to $1.3712 range. Wednesday and Thursday, for the first time since February 17, the pair tested the waters above $1.3700, but then stalled. While the market remains bearish towards the euro, in the short term analysts warned of potential for renewed gains. BNP Paribas strategists note that the E5 billion Greek bond auction saw strong bids, and "unlike the January auction it seemed that more real money and less hot funds were involved in the bidding." Therefore, the prospects for Greek bonds are improved compared to January. "This is a positive factor for the euro where a short covering rally can be unleashed at any time," the strategists said. Traders also remind that euro short positions remain extended. Last Friday's CFTC data, for positions as per February 23, showed that speculative accounts had a net euro short of -71,623 contracts, a new record euro short position, and nearly double the prior record short seen in September 2008. The euro closed at $1.3505 February 23 not all that far from current levels, which suggests that positions have not been trimmed all that much, traders said. In other currencies, dollar-yen rallied sharply Thursday as the pair tracked short-term U.S. Treasury yields higher. Dollar-yen closed at Y89.08, on the high side of a Y88.15 to Y89.25 range. In addition to rising U.S. yields, the pair was underpinned by the prospects of potential Bank of Japan intervention. The BOJ last stepped in to weaken the yen in March 2004, after a year of widespread intervention. Steven Barrow, senior currency strategist at Standard Bank in London, warned not to read too much into a Japanese government provision in the 2010/2011 budget that would allow a Y5 trillion ($56.2 billion) rise in the borrowing limit for FX intervention (to Y145 trillion or $1.629 trillion). The last time the government raised the limit was in 2004, just after it finished "hefty" FX intervention, he said. "The move might be designed to warn the market that the Bank could intervene again but, in our view it had plenty of ammunition before the increase and it is more a warning shot across the markets bow than a clear signal that the Bank is about to act," Barrow says. He did not look for the BOJ to intervene in dollar-yen until the pair trades back in the low Y80s. In other markets Thursday, the S&P 500 closed up 0.37% at 1122.97, after trading in a 1116.67 to 1123.74 range. The S&P stalled at 1125.58 Wednesday, but market players saw scope for a retest of the 2010 highs of 1150.50 in coming sessions if risk appetite continues to pick up. ** Market News International New York Newsroom: 212-669-6430 ** [TOPICS: MNEF01] 3/4/2010 4:18:00 PM