* Dollar keeps to narrow range ahead of US jobs report
* Dollar index edges further away from 2-week highs
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh (Adds details and quotes, updates prices)
By Shinichi Saoshiro
TOKYO, Sept 7 (Reuters) - The dollar eased against the yen on Friday after a report suggested that Japan would be the next country with which U.S. President Donald Trump will take up trade issues.
The U.S. currency held in relatively tight ranges against other major peers such as the euro and pound, with the market bracing for the highly anticipated U.S. jobs report due later in the session.
According to CNBC television, President Trump hinted to a Wall Street Journal columnist that he might next take up trade issues with Japan.
The U.S. president has already challenged China, Mexico, Canada and the European Union on trade issues. He has repeatedly accused other countries of devaluing their currencies and putting the United States at a disadvantage.
The dollar extended overnight losses and last traded at 110.57 yen for a loss of 0.17 percent.
“In addition to dollar/yen, other currencies have also declined against the yen. Although the real motive behind Trump’s comments is still unclear at this stage, the market has taken note of the possibility of Japan being affected by a broader trade conflict,” said Shusuke Yamada, currency and equity strategist at Bank of America Merrill Lynch in Tokyo.
Trump has previously expressed displeasure towards the large U.S. trade deficit with Japan. But so far Washington has not asked Tokyo to take specific steps to address the trade imbalance.
“Ongoing NAFTA negotiations with Canada might not provide Trump with much support ahead of the midterm elections, there’s little progress in trade talks with China and car tariff discussions with the European Union have a long way to go,” said Daisuke Karakama, chief market economist at Mizuho Bank.
“Under such circumstances it would not be surprising if Trump has decided to turn his focus on Japan.”
Global trade concerns continued to take a toll on broader risk sentiment, further supporting the yen, which is seen as a safe haven.
The euro was down 0.2 percent at 128.39 yen and the pound had shed 0.2 percent to 142.88 yen.
The Australian dollar lost 0.6 percent to 79.20 yen , slipping to a new 21-month trough.
Against the greenback, the Aussie was down 0.5 percent at $0.7163, edging back towards a two-year low of $0.7145 plumbed on Wednesday.
The currency, considered a barometer of broader risk sentiment, has taken heavy hits from recent tumult in emerging markets.
An uncertain economic outlook for China, Australia’s key trading partner, has also weighed on the Aussie.
Asian equities sagged across the board on Friday, with a public comment period for proposed U.S. tariffs on an additional $200 billion worth of Chinese imports ending at 0400 GMT.
The tariffs could go into effect shortly afterward, which would mark a sharp escalation of an ongoing trade conflict between the world’s two biggest economies.
The dollar index against a basket of six major currencies was little changed at 95.05 after losing about 0.2 percent on Thursday, pulling further back from a two-week peak scaled on Tuesday amid turmoil in emerging market currencies.
In focus was the August U.S. non-farm payrolls report due at 1230 GMT. The U.S. economy is expected to have added about 191,000 jobs in August, with average earnings at 0.2 percent month-on-month compared to 0.3 percent from July.
The Federal Reserve is poised to hike interest rates this month, its third monetary tightening move in 2018, and the employment data is expected to shape investors’ near-term outlook on interest rates.
The euro was 0.05 percent weaker at $1.1617, having gained about 0.15 percent this week.
The pound was steady at $1.2928 after rising 0.15 percent the previous day. Sterling was down 0.3 percent on the week.
China’s yuan was down 0.2 percent at 6.8410 in onshore trade . (Reporting by Shinichi Saoshiro Editing by Eric Meijer & Shri Navaratnam)