LONDON, Oct 8 (Reuters) - The dollar edged higher versus major peers on Friday but within a narrow range as traders awaited clues from the U.S. non-farm payrolls report on the pace of Federal Reserve policy normalization. The U.S. Dollar Currency Index, which measures the greenback against a basket of six peers, rose 0.1% to 94.294, keeping within sight of last week’s one-year peak of 94.504. The dollar gained 0.3% to 111.96 yen, and touched 111.975, the highest level this month, helped by higher Treasury yields, with the benchmark 10-year note hitting 1.6010% for the first time since June 4. The euro consolidated around $1.1550, after weakening on Wednesday to a 14-month low of $1.1529. The Federal Reserve has said it is likely to begin reducing its monthly bond purchases as soon as November and follow up with interest rate increases potentially next year, as the U.S. central bank’s turn from pandemic crisis policies gains momentum. The non-farm payrolls data, due out later on Friday, is expected to show continued improvement in the labour market, with a consensus forecast for 500,000 jobs added in September, although estimates ranged from 250,000 to 700,000, a Reuters poll showed. “Our expectations are for a 470k rise in employment (consensus is around 500k), which should be enough to endorse market expectations around a November tapering announcement and late-2022 rate hike, in our view,” said Francesco Pesole, G10 FX strategist at ING. “Ultimately, a solid number should give little reason to turn any less bearish on the longer end of the curve. In FX markets, this may well translate into general support for the dollar and another bad day for the yen, the worst performing G10 currency so far (this year),” Pesole said. Following the September Federal Open Market Committee meeting, Fed Chair Jerome Powell said the upcoming payrolls report need not be “a knock-out, great, super-strong” report to keep policy makers on track toward tapering, but it would need to be “reasonably good”. Powell’s comment “should make markets more tolerant of a downside surprise in particular, and the balance of risks favours a positive USD reaction” to the jobs data, Adam Cole, the chief currency strategist at RBC Capital Markets, wrote in a research note. Meanwhile, the Australian dollar slipped back 0.26% to $0.7293, following a 0.55% surge on Thursday. It earlier touched $0.7324 for a second day running, the strongest level since Sept. 16. The Aussie has made “a decent go at breaking higher,” but the test will be whether it can stay at about $0.7315 following several failed attempts this year, Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney, wrote in a client note. Sterling slipped 0.16% to $1.3595, holding on to most of a 0.26% gain from Thursday, when new Bank of England Chief Economist Huw Pill said inflation pressures were proving stickier than initially thought, reinforcing expectations for a rate hike by February. The Canadian dollar was little changed at C$1.2548 per greenback after earlier strengthening to a one-month peak of C$1.2534 on the back of rising oil prices. Reporting by Ritvik Carvalho; additional reporting by Kevin Buckland in Tokyo; editing by Susan Fenton