The dollar briefly hit a one-month low versus the yen and a one-week low against the euro on Friday, as a mixed bag of U.S. job market indicators bred caution ahead of a crucial monthly payrolls report later in the day.

A report on Thursday showed the number of Americans filing new applications for jobless benefits declined last week as layoffs remained low. That helped allay fears that the labour market was deteriorating rapidly, after figures released the previous day showed private jobs growth slumped to a 3-1/2-year low in August.

Traders currently see 41% odds for a super-sized 50-basis point (bp) Fed interest rate cut on Sept. 18, versus a 59% probability of a quarter-point reduction, according to the CME Group's FedWatch Tool. A day earlier, wagers on the larger cut stood at 44%, but a week ago they were 30%.

The mixed data left traders guessing before Friday's payrolls print, with economists surveyed by Reuters predicting an increase of 160,000 jobs in August, up from a 114,000 rise in July.

Traders have sold the dollar against other currencies fairly consistently over the last couple of months, as concern has risen that a slowing U.S. economy will require chunky rate cuts.

"If you look at where positioning is, people are probably banking on too much of a dovish move from the Fed," IG chief market strategist Chris Beauchamp said.

"Manufacturing ISM and ADP were all dire earlier in the week and it's leading people to expect a negative (number), which, if it doesn't come in as a shocker, as some people are hoping for, some of those 50-bp bets could get dialled back and people start buying back the dollar, which, conversely, might weigh on other markets," he said.

What the Fed makes of the payrolls numbers will be almost immediately obvious, with both Governor Christopher Waller and New York Fed President John Williams separately taking to the podium in the final Fedspeak before the blackout period begins ahead of this month's policy gathering.

Fed Chair Jerome Powell signalled that the central bank's focus was shifting from fighting inflation to preventing deterioration in the job market when he strongly endorsed an imminent start to the monetary easing cycle at the annual economic conference in Jackson Hole last month.

"Recent labor data has fanned fears of labor market softening (and) the August payroll report could be a 'make or break' moment," TD Securities analysts including head of global strategy Rich Kelly wrote in a report.

However, TD expects 205,000 jobs were added in August, setting up a quarter-point cut this month, and triggering a dollar rebound.

"There is simply lots of bad news priced into the USD, increasing the risks that a string of good news will kick-start a sizeable correction."

The dollar fell almost 1% against the yen at one point in European trading, in line with a drop in U.S. Treasury yields. It retraced some of that move to show a 0.5% decline on the day, trading at 142.69 yen, its weakest since Aug. 5.

The euro held its ground at $1.1104, just below Thursday's high of $1.11195, the most since Aug. 29, while sterling was little changed at $1.3175, nudging at one-week highs.

The dollar index, which gauges the currency against the yen, euro, sterling and three other major peers, was flat at 101.04.

The Swiss franc, which like the yen is a traditional haven currency, strengthened by 0.2% to 0.8427 to the dollar.

In cryptocurrencies, bitcoin surrendered overnight gains and fell 0.2% to $55,955.

(Reporting by Kevin Buckland; editing by Shri Navaratnam, Kim Coghill, Andrew Heavens and Mark Heinrich)