UPDATES ON OCT 3 2008

OCT 3 FRIDAY

Dollar Heads for Weekly Loss Versus Yen

Before Payrolls Report .

The dollar headed for a third weekly loss against the yen

before a government report that will probably show a

deepening credit crunch contributed to the biggest drop in

employment in more than five years.

The dollar pared this week's gain versus the euro on

speculation the U.S. economy will weaken regardless of

whether lawmakers pass a bill to buy troubled assets from

banks in a vote today. The euro was set for a record weekly

drop against the greenback after European Central Bank

President Jean-Claude Trichet said yesterday policy

makers discussed cutting the benchmark interest rate

before holding it at 4.25 percent.

For the week, the dollar declined 0.8 percent against the yen.

The euro declined 5.2 percent versus the dollar, the biggest

weekly drops since the 15-nation currency's debut in

January 1999. It fell 5.9 percent against the yen, the

biggest weekly decline since March 2000.

Futures on the Chicago Board of Trade yesterday showed

a 94 percent chance the Fed would cut its 2 percent target

rate for overnight lending between banks by a half-

percentage point on Oct. 29, with the balance of bets

on a quarter-point reduction. Futures showed no

chance of lower rates a month ago.

The U.S. House of Representatives will vote on the latest

version of a $700 billion bank rescue plan at about 12:30

p.m. in Washington. The Senate voted 74-25 on Oct. 1

in favor of legislation that links the rescue of the financial

industry to an increase in bank-deposit insurance limits

and tax breaks after the House rejected an earlier

version of the bill.

The dollar rose against all of the 16 most-active currencies

except the yen yesterday as demand for U.S. currency

funding increased, reflecting the reluctance of banks

to lend.