* Weak U.S. service sector, labour data weigh on greenback
* Yen helped by Japanese media report on BOJ policy discord
TOKYO, Sept 7 The yen charged ahead on Wednesday
after downbeat U.S. economic data made a U.S. interest rate
increase this month unlikely, prompting investors to trim their
dollar bets and triggering stop-loss orders in early Asian
The dollar was down 0.6 percent at 101.41 yen after
dipping as low as 101.20 earlier, its lowest since Aug. 26 and
well below last Friday's high of 104.32 yen.
It had tumbled more than 1 percent against its Japanese
counterpart on Tuesday.
"I still maintain my view that the dollar will trade around
100 to 102 yen until the U.S. presidential election," said
Harumi Taguchi, principal economist at IHS Markit in Tokyo.
The Institute for Supply Management's non-manufacturing
purchasing managers' index fell to 51.4 last month, far short of
economists' expectations and the largest one-month drop since
November 2008, giving the U.S. Federal Reserve reason to delay
increasing interest rates.
The Federal Reserve's labour-market conditions index also
fell in August, slipping back into negative territory after a
positive reading in July.
Nonetheless, San Francisco Fed President John Williams said
in prepared remarks late on Thursday that the economy was in
"good shape" and that it "makes sense to get back to a pace of
gradual rate increases, preferably sooner rather than later."
Williams did not directly cite Thursday's U.S. data.
Also bolstering the yen was the Sankei newspaper's report
saying Bank of Japan policymakers were divided ahead of the
central bank's Sept. 20-21 meeting, at which BOJ Governor
Haruhiko Kuroda has said the board will conduct a comprehensive
assessment of its massive stimulus programme.
The BOJ will refrain from accelerating money printing or
deepening negative rates this month as improvements in the
economy make it hard to justify again deploying "bazooka"-like
big stimulus, Kazuo Momma, who oversaw the bank's monetary
policy drafting and global affairs until May, told Reuters on
In a speech on Monday, Kuroda signalled his readiness to
further expand stimulus, but he did not provide any explicit
hints about aggressively easing policy.
"After Kuroda's remarks earlier this week and today's Sankei
report, there is some opinion that at the end of the day on
Sept. 21, everything will be unchanged, because of disagreement"
among BOJ board members on steps," said Naomi Muguruma, senior
strategist at Mitsubishi UFJ Morgan Stanley Securities.
The euro skidded 0.6 percent to 114.10 yen after
falling as low as 113.815 earlier. But it was steady on the day
against the dollar at $1.1255.
The dollar index, which tracks the greenback against a
basket of six major rivals, edged down 0.1 percent to 94.759
after touching 94.742, its deepest nadir since Aug. 26.
The Australian dollar slipped 0.2 percent to
$0.7673 after rising more than 1 percent on Tuesday after the
Reserve Bank of Australia held interest rates steady at 1.5
Data on Wednesday showed the Australian economy expanded its
the fastest annual pace in four years last quarter, to log a
quarter century without recession.
(Reporting by Lisa Twaronite; Editing by Eric Meijer and Kim