* Dollar records worst quarter in 6 1/2 years
* Payrolls report not expected to boost dollar much
* Yellen's dovish speech still undermining greenback
* Yen logs best quarterly performance since 2009
By Jemima Kelly
LONDON, April 1 The dollar slipped on Friday after recording its worst quarter in 6 1/2 years, with investors doubtful that a monthly U.S. jobs report will convince them to move up expectations for when interest rates will rise again.
The greenback shed over 4 percent against a basket of major currencies in the first quarter, as turbulent global markets and an increasingly cautious tone from the Fed pushed back expectations for when U.S. rates might rise again, after the first increase in almost a decade in December.
The dollar index was down 0.1 percent on Friday at 94.60, having hit a 5 1/2-month low of 94.319 on Thursday.
Earlier in the week, Fed Chair Janet Yellen highlighted risks to the global economy and said the Fed should proceed "cautiously" on raising rates. After her speech, interest rates futures implied that traders saw only a 5 percent chance the Fed would raise rates at its next policy meeting, on April 26-27 .
The nonfarm payrolls report in the U.S., due at 1230 GMT, is usually one of the most closely watched releases of the monthly data calendar. But some analysts said a strong report would not have the impact it often has, because it would need to be backed up by a more hawkish tone from the Fed to translate into dollar strength.
"The most important number for the U.S. dollar is the average earnings ... but even if we see a better number, this will create hope but it will not convince the market that everything is OK," said Commerzbank currency strategist Esther Reichelt, in Frankfurt.
"I don't expect substantial dollar appreciation, but rather for it to remain cautious."
The report is expected to show that employers added 205,000 jobs in March and average monthly earnings rose 0.2 percent on the month after February's 0.1 percent decline.
Against the yen, the dollar slipped about 0.4 percent on Friday to 112.17. It slid more than 6 percent against the yen in the first quarter, its biggest loss since 2009, as market turmoil sent investors into the perceived safety of the Japanese currency.
That trend continued on Friday, after a downbeat business survey helped send Japan's Nikkei stock index plunging on the first day of the country's fiscal year.
"The 112 (yen) level is holding up, and people were buying on the dip, so there is clearly some real demand for dollars around this level," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.
The euro was up 0.1 percent at $1.1388, after gaining more than 4 percent for the quarter and hitting a more than 5-month high of $1.4120 on Thursday. (Additional reporting by Lisa Twaronite in Tokyo, editing by Larry King)
