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Noda added that he believed he had gained the understanding of his G7 counterparts regarding Japan's stance on currency market intervention during an informal dinner meeting.

"We did not discuss anything about the future, but I believe we've gained understanding on our basic stance," Noda told reporters after the meeting.

Tokyo intervened in the currency market for the first time in six years on September 15 as the yen's steady rise against the dollar threatened to derail Japan's export-reliant recovery from its worst recession in decades.

Investors remain on full alert for further intervention by Japan as an unexpected drop in U.S. payrolls data pushed the dollar to a fresh 15-year low against the yen on Friday.

Noda said his explanation of Japan's currency intervention did not draw any response from other G7 members, but added "various views" were exchanged on currency rate matters.

The G7 finance leaders agreed that currency moves should reflect economic fundamentals, and that emerging economies with current account surplus should move toward a more flexible currency system, Noda said.

When asked whether such emerging economies included China, Noda said: "It's included."

Currency tensions have risen to the top of the agenda for the IMF meetings as policy makers deal with a drive by many of the world's economies to cap the strength of their currencies.

The United States and the European Union accuse China of keeping its currency artificially weak to promote exports, undermining jobs and economic growth in the West.

Japan takes a more hands-off approach and has repeated that a more flexible yuan will benefit China's own economy by keeping inflation in check.

(Reporting by Leika Kihara; Editing by Edmund Klamann)

Normally when the likes of JPMorgan or Intel --also reporting next week -- tell investors how much they earned in the previous quarter, the stock market hangs on every word.

But after Friday's surprisingly anemic payrolls report, the increased likelihood the Fed will buy more assets like Treasury bonds to stimulate the economy has investors ignoring the usual benchmarks.

"Markets have been oscillating between macro and micro data, and the upcoming week will focus on macro," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

The fact that Wall Street closed Friday in the black despite the weak payrolls data is evidence the Fed's action is top of mind for investors at this time.

Action from the central bank has already been baked into the equities rally, with $500 billion as the most talked-about injection. And the risk of a decline in equities is off balance as both good and bad economic news could have a bullish effect on stocks.

"Good news is clearly good and the market goes up," said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.

"If earnings or economic news is bad, then we'll get" a second round of quantitative easing, he noted. "Therefore the market will still go up. In that sense, risk is asymmetric."

Economic data next week, including consumer and producer prices, retail sales and consumer sentiment could shed further light on whether the economy has slowed enough to require swift action from the Fed.

"If CPI shows core inflation is going to fall, further odds of aggressive QE --as opposed to a trickle -- will increase and that will be viewed positively by the market," said Praveen.

EARNINGS TAKE BACK SEAT

Intel Corp (INTC.O), JPMorgan Chase & CO (JPM.N), Google Inc (GOOG.O) and General Electric Co (GE.N) are among the largest companies that will post earnings next week. Intel warned in late August that its revenue could fall short and its shares got punished, so there's little space for a negative surprise.

And if Alcoa's report on Thursday was any indication, even bellwethers' numbers may have to vary enormously from expectations to be noted amid all the QE2 talk.

Alcoa Inc (AA.N) marked the unofficial start to earnings season, rising 5.7 percent to $12.89 a day after its results beat estimates. While the stock rose sharply, it was far from the market's focal point, which hinged on the expectation of the Fed's action.

And next week's Treasury auctions, especially of longer-term bonds, may also provide a boost to stocks.

Policymakers could wait until December if they felt the need for greater clarity on the outlook, Bullard told CNBC television, though he acknowledged that financial markets were already assigning a very high probability of Fed action at the November meeting.

"This upcoming FOMC meeting is going to be a tough call, because the economy has slowed but it hasn't slowed so much that it's an obvious case to do something," Bullard said.

"I do think the risk of a double-dip recession has probably receded some in the last six to eight weeks."

Bullard, a self-proclaimed hawk, said the recent downward trend in inflation was a concern. However, he dismissed the argument that more Fed easing, which would take the form of further Treasury purchases, would be ineffective.

He cautioned against allowing the United States to go the way of Japan, a country that has struggled with a prolonged period of depressed prices and economic stagnation.

He indicated that, despite some reluctance about the risks of unconventional policies, the situation might require bond purchases beyond the more than $1.7 trillion the Fed has already conducted in response to the financial crisis.

"It doesn't seem like it's going to come back toward (the Fed's inflation) target unless we take further action," Bullard said.

After bouncing back from the worst recession since the Great Depression beginning last summer, U.S. gross domestic product expanded at a paltry 1.7 percent in the second quarter, raising worries about the prospect of a renewed contraction.

The government is expected to report on Friday that private employers added 75,000 jobs in September after an increase of 67,000 in August, according to a Reuters survey. The report is due at 8:30 a.m. EDT.

There is a risk, however, that overall nonfarm payrolls fell for a fourth straight month after an independent survey this week showed a contraction in private jobs in September.

Government employment is expected to be depressed by the termination of more temporary jobs for the decennial census and layoffs at cash-strapped local and state governments.

In the wake of dovish speeches by senior Fed officials, including Chairman Ben Bernanke, analysts said it was now almost certain that the U.S. central bank would launch a second round of asset purchases -- with many expecting a move in November -- even if the jobs report surprised on the upside.

"They may delay it till December, but the odds favor we get something. It might not be as much as the market wants, because the economy might be doing better," said Michael Strauss chief economist at Commonfund in Wilton, Connecticut.

Expectations that the Fed, which has already pumped $1.7 trillion into the economy by buying mortgage-related and government bonds, would announce a second phase of quantitative easing at its November 2-3 meeting have buoyed U.S. stocks and prices for shorter-dated government debt and have undercut the dollar.

The employment report will be the last before the November 2 mid-term elections in which President Barack Obama's Democratic Party is expected to suffer large losses amid voter dissatisfaction with the state of the economy.

Opinion polls suggest Republicans will take control of the U.S. House of Representatives, which may give them a platform to pursue their agenda of restricting government spending to reduce a record budget deficit.

SIGNS OF IMPROVEMENT

The recovery from the longest and deepest downturn since the 1930s has been too slow to generate jobs, but the labor market is beginning to show some improvement.

First-time applications for unemployment benefits have dropped from a nine-month high touched in mid-August and some surveys have suggested a pick-up in demand for labor.

In addition, the government last month revised payrolls data for June and July to show fewer job losses, and analysts will be watching to seen if the trend continued in August.

"More jobs than people realize are being created," said Brett D'Arcy chief investment officer at CBIZ Wealth Management in San Diego, California.

"This recovery, although a longer recovery, is following the traditional steps of how a recovery happens. We are at the point where we should and probably will see some fairly strong job creation."