The Dollar rose against the Yen on Friday as a slightly above-forecast Jobs report eased some concerns that a housing slump had spread to the broad economy and reduced chances of an aggressive Fed interest rate cut.

Analysts said it was now certain the Federal Reserve would lower its benchmark overnight lending rate by only 25bp to 4.25% next Tuesday rather than 50bp as the economy was not falling off a cliff. While a quarter-point easing would still reduce the allure of Dollar-denominated assets, analysts said a deeper cut would cause investors to worry more about the economy's prospects than they already were. Rate futures are factoring in a roughly 41% chance of a 50-basis-points interest-rate cut from 47% on Thursday and 65% a week ago. A quarter-point reduction has been fully priced in.

On Friday, UsdJpy traded 0.29% higher at 111.69. EurUsd, which continued to draw support from European Central Bank President Jean-Claude Trichet's hawkish inflation comments on Thursday, traded unchanged at 1.4657 after a brief drop down to 1.4599 following the payrolls data. EurJpy rose 0.27% to 163.70.

Volumes were light on Friday with some traders reluctant to take positions into the weekend and ahead of the Federal Open Market Committee meeting.

The Euro got a boost on Thursday, recovering from three-week lows versus the Dollar, after Trichet warned of strong upward pressure on inflation and said some euro zone central bankers had wanted a rate rise from the current 4%.

A surprisingly strong Canadian jobs report boosted the Canadian dollar against the US currency, recouping some losses triggered by an unexpected interest rate cut this week. UsdCad last traded down 0.33% at 1.0053.