Aug. 3 (Bloomberg) -- The dollar rose against the yen after Japan's currency failed to strengthen beyond a technical level that may have triggered a further advance.

The U.S. currency's advance began when the yen retreated from 111.30 per dollar, its highest level since June 30. The dollar was also boosted by speculation a government report on August 5 will show U.S. job growth accelerated, said Sven Friebe, a currency strategist at Credit Suisse Group in Zurich.

``We do think the yen can gain further, but it's not breaking the critical levels yet,'' said Friebe. ``That's limiting the chances for a move upwards against the dollar, and there's also the chance of a positive surprise from the U.S. jobs data.''

The U.S. currency rose to 111.68 yen as of 8:15 a.m. in London, from 111.47 late yesterday in New York, according to electronic foreign-exchange dealing system EBS. It was also at $1.2198 per euro, from $1.2191.

The Japanese currency last strengthened beyond 111.30 at the close of trading on July 21 after China revalued the yuan, ending a decade-old peg of about 8.3 versus the dollar.

The yen also snapped a two-day rally before the upper house of parliament votes on a plan to sell Japan's postal system, a priority for Prime Minister Junichiro Koizumi's government.

Koizumi told reporters in Tokyo today a vote against the bill would amount to a rejection of his leadership. A vote will be held on Aug. 5.

``We cannot expect a too-much stronger yen,'' said Takako Masai, head of currency and derivative sales in Tokyo at Calyon, the investment banking unit of Credit Agricole SA, France's largest bank. ``Investors will take a wait-and-see attitude toward the fate of the postal reform bill this Friday.''

European Economy

The euro may gain today as a report is expected to show European service industries growth accelerated in July, adding to signs the economy of the dozen nations sharing the currency is recovering from a second-quarter slowdown.

A gauge of service industries, such as banks and airlines, rose to 53.4 from 53.1 in June, according to the median of 30 economists surveyed by Bloomberg. A reading above 50 indicates growth. The survey by NTC Research Ltd. for Reuters Group Plc is due for release at 9:00 a.m. in London.

``A report with positive figures will lead to euro buying, as it shows Europe is in the process of economic recovery,'' said Akihiro Tanaka, senior currency dealer in Tokyo at Resona Bank Ltd. ``With this report we will probably figure out the European economy is not as bad as we thought.'' The euro may rise to $1.2250 this week, he said.

Jobs Report

The Labor Department may say the U.S. economy added 180,000 jobs last month, compared with 146,000 in June, according to the median forecast of 71 economists surveyed by Bloomberg News.

Personal spending rose 0.8 percent in May, according to a U.S. Commerce Department report yesterday. Economists in a Bloomberg survey expected a 0.4 percent gain. A separate government report showed U.S. factory orders expanded 1 percent in June.

``The dollar will tend to strengthen,'' said Amy Auster, a senior economist in Melbourne at Australia & New Zealand Banking Group Ltd. ``The rising interest-rate differential is the reason behind that.''

To contact the reporter on this story: Rodrigo Davies at rdavies13@bloomberg.net

Last Updated: August 3, 2005 03:22 EDT