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NEW YORK, May 6 (Reuters) - The dollar rose against the yen and euro on Friday but fell against higher-yielding currencies as a surprisingly large jump in U.S. payrolls soothed worries about the economy and whetted traders' appetite for risk.

The euro faced added selling pressure after a German media report suggested Greece had raised the possibility of leaving the euro zone, a scenario that analysts said would cause problems for European banks exposed to Greek debt. For more, see [ID:nBAT006205]
The euro beat a further retreat from a 17-month high above $1.49. The currency hit a session low of $1.4373 and is down 1.1 pct at $1.4380 EUR=, heading for its worst week against the dollar since January.

"Greece leaving the euro zone could cause a cascade of problems, especially for the banking sector and particularly if the European Union allows Greece unilaterally to default on its loans," said Geoffrey Yu, senior currency strategist at UBS.

The dollar also got a boost from data showing U.S. employers added 244,000 jobs last month, well above what economists had expected. That boosted U.S. bond yields and increased the dollar's appeal against the yen. It was last up 0.4 percent at 80.49 yen JPY=.

It also offered respite for a market that was trying to digest a recent run of weaker-than-expected U.S. data that some feared pointed to a slowdown in the pace of U.S. growth.
Concern that the world economy would also lose steam spurred a massive run for the exit on Thursday, sending oil into free-fall and hurting high-yielding currencies such as the Australian dollar that are sensitive to commodity prices and the global growth outlook.

Thursday's commodity rout spurred traders to unwind trades financed with cheaply borrowed dollars, and the greenback had its best day against major rivals since October. .DXY
Those moves were partly reversed on Friday, though oil dipped back under $100 a barrel after the Der Spiegel online report on Greece. It fell 10 percent on Thursday. CLc1
"Yesterday was an overreaction, a sort of 'get-me-out' now moment driven by margin traders who feared the global economy was getting worse," said Brian Dolan, chief strategist at Forex.com. "That just doesn't seem to be the case, and the jobs number shows the U.S. economy is still recovering. There will be setbacks, but we think it will continue to plod along."

The Australian dollar soared 1.5 percent to $1.0740 AUD=D4, helped after the central bank warned already high 4.75 percent interest rates may have to rise further, while Canada's dollar CAD= rose on the stronger U.S. jobs data.

MEDIUM-TERM EURO OUTLOOK POSITIVE
Analysts predicted the dollar would stay well supported in the short-term against major currencies such as the yen and euro but would struggle against commodity-linked currencies.
"Different currencies have different sensitivities to risk, so the dollar won't gain as much against the Australian dollar, for instance, as against the yen," said Steven Englander, head of G10 FX strategy at Citigroup.

Some traders, though, said the euro was still likely to gain against the dollar in the medium term, as euro zone interest rates are expected to rise much more quickly than those in the United States.
The euro fell nearly 2 percent on Thursday after the European Central Bank President Jean-Claude Trichet signaled a rate hike was unlikely next month but left the door open to a move in July.
"We've had a healthy correction in euro/dollar, but I don't think this is a sea-change in sentiment and wouldn't expect it to move much below $1.45," said RBS strategist Paul Robson.

Dolan said expectations of a June ECB rate hike took the euro from $1.46 to $1.49 earlier this week and had simply priced that move out. He said the euro will likely settle into a $1.4450-$1.48 range over the coming weeks.

And even with the stronger-than-expected U.S. jobs data, few investors are pricing in U.S. interest rate hikes any time soon, particularly with the jobless rate jumping from 8.8 percent to 9 percent in April. [ID:nOAT004799]

"All the major headwinds are still there -- 9 percent unemployment, a housing market still in the tank, high food and energy prices impeding consumer spending," Dolan said.

Douglas Borthwick, managing director of Faros Trading, said, "The U.S. economy remains weak and so shall the dollar." <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on commodity moves: r.reuters.com/nab49r
Dollar/commodity correlations: r.reuters.com/wex39r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Gertrude Chavez-Dreyfuss in New York Jessica Mortimer in London; Editing by Kenneth Barry)

http://www.reuters.com/article/2011/05/06/markets-forex-idUSN0620795220110506?feedType=RSS&feedName=usDollarRpt