* Biggest single-day dollar slide in three weeks
* Dollar's drop erases almost all the week's gains
* Jobs growth slows but wage gains point to tight market
* Focus now on consumer price index (CPI) next week

By Herbert Lash
       NEW YORK, Aug 4 (Reuters) - The dollar fell on Friday,
paring almost all the week's gains, after slowing U.S. jobs
growth in July encouraged hopes of a soft economic landing but
higher wages suggested the Federal Reserve may need to keep
interest rates higher for longer. 
    The U.S. economy added fewer jobs than expected last month.
However, solid wage gains and a drop in unemployment to 3.5%
signaled continued tightness in the labor market.
    Nonfarm payrolls increased by 187,000 jobs last month, the
Labor Department's survey of households showed, less than a
Reuters' survey of economists who forecast growth of 200,000.
    Revisions lower in May and June job growth suggested demand
for labor was slowing after the Fed's hefty rate hikes. But with
1.6 job openings for every unemployed person, the moderation in
hiring might indicate companies are failing to find workers.
    The softer-than-expected jobs number halted this week's
surge in Treasury yields and stopped the dollar's recent climb,
said Marc Chandler, chief market strategist at Bannockburn
Global Forex in New York.
    "There's a short squeeze in the foreign currencies, a bit of
a long-dollar liquidation encouraged by a sharp drop in interest
rates," he said. "The dollar's upside correction is almost
over."
    However, Chandler doubted the market's view of a soft
landing ahead of next week's Consumer Price Index (CPI) report,
which he said could show the first year-over-year rise in
inflation since June 2022.
    The market was positioned for a blowout number after a
private payrolls report and still-low jobless claims data
earlier this week, said Kathy Lien, managing editor of 60 Second
Investor in New York. 
        "The case is still for a soft landing at worst," Lien
said. "But all of today's data leaves the door open for another
rate hike from the Federal Reserve."
  
    The dollar index, a measure of the U.S. currency
against six peers, fell 0.459% after climbing on Thursday to
102.84, the highest since July 7. The decline was poised to be
the dollar's biggest single-day loss in three weeks.
    The U.S. labor market is trending in the right direction,
with two consecutive monthly (jobs) prints after the revision
for June now below 200,000, said Marvin Loh, senior global macro
strategist at State Street in Boston.
    "Like a lot of the data we've gotten of late, there are
things for the bulls and there are things for the bears," he 
said.
    Slowing jobs growth puts the economy closer to "that magical
100,000 to 120,000 per month creation number" that Fed Chair
Jerome Powell would like to see, Loh said.
    But "wages picked up. We're now running at 4.4% average
hourly earnings year over year. That's still inconsistent with
the Fed's 2% goal," he said.
    The euro gained 0.62% to $1.1012 and the Japanese yen
strengthened 0.50% at 141.85 per dollar. 
    Long-term U.S. Treasury yields hit nine-month highs on
Thursday, on the back of a deluge of supply as well as data
pointing to further resilience in the labor market. 
    The yen has been sensitive to higher U.S. yields as the Bank
of Japan keeps local rates pinned down. After the BoJ's surprise
monetary policy tweak last week, traders are trying to gauge how
fast and how high it will let yields rise.
    The Australian dollar was buoyed - in addition to dollar
weakness - by the end of Chinese anti-dumping and anti-subsidy
tariffs on Australian barley imports as the trade partners
repair strained ties.
    The Aussie rose 0.37% versus the greenback to $0.658.
    The Swiss franc, the G10 currency that has gained the most
against the dollar this year, reversed declines after the jobs
data. The dollar fell 0.18% against the franc.      
    Sterling was last trading at $1.2755, up 0.33% on the
day.

    Currency bid prices at 2:40 p.m. ET (1840 GMT)
 Description      RIC         Last       U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                          Previous                   Change                   
                                          Session                                             
 Dollar index                 101.9700   102.4500    -0.47%         -1.469%       +102.6200   +101.7300
 Euro/Dollar                  $1.1014    $1.0950     +0.59%         +2.80%        +$1.1042    +$1.0935
 Dollar/Yen                   141.8400   142.5200    -0.47%         +8.19%        +142.8750   +141.5500
 Euro/Yen                     156.22     156.04      +0.12%         +11.35%       +156.6300   +155.9100
 Dollar/Swiss                 0.8726     0.8742      -0.22%         -5.67%        +0.8782     +0.8700
 Sterling/Dollar              $1.2755    $1.2709     +0.40%         +5.51%        +$1.2792    +$1.2689
 Dollar/Canadian              1.3374     1.3353      +0.16%         -1.29%        +1.3394     +1.3320
 Aussie/Dollar                $0.6576    $0.6549     +0.41%         -3.53%        +$0.6609    +$0.6542
 Euro/Swiss                   0.9611     0.9570      +0.43%         -2.87%        +0.9623     +0.9570
 Euro/Sterling                0.8634     0.8613      +0.24%         -2.39%        +0.8647     +0.8602
 NZ                           $0.6100    $0.6077     +0.40%         -3.91%        +$0.6133    +$0.6072
 Dollar/Dollar                                                                                
 Dollar/Norway                10.1260    10.2440     -1.26%         +3.07%        +10.2380    +10.0850
 Euro/Norway                  11.1544    11.2221     -0.60%         +6.30%        +11.2469    +11.1264
 Dollar/Sweden                10.5754    10.6988     -0.39%         +1.61%        +10.7203    +10.5370
 Euro/Sweden                  11.6484    11.6945     -0.39%         +4.47%        +11.7325    +11.6290
 

    
 (Reporting by Herbert Lash; Editing by Tomasz Janowski, Deepa
Babington and Richard Chang)