The U.S. dollar declined Thursday as market participants positioned themselves for today's report on U.S. employment conditions in August.

Losses were greatest against the Japanese yen, as concerns about Japan's banking crisis began to ease a bit.The U.S. employment report is expected to show a rise of 150,000 in non- farm payrolls, showing that the economy is growing, although manufacturing remains soft.

Analysts said the report alone may not be sufficient to change Federal Reserve monetary policy.

The dollar trimmed its losses against the yen after Japan Ministry of Finance's Masayoshi Takemura reportedly said that the current dollar-yen levels are not reflective of economic fundamentals.

According to Robert Near, dealer at Bank of New York, "The dollar certainly moved higher after Takemura's comments. The Ministry of Finance understands that there is a problem. The Japanese government is going to feel

pressure to come up with a real stimulus package."

Dealers in London said the deutsche mark was benefiting Thursday from the plunge of the dollar against the yen amid huge stop-loss sell orders.

Activity on Nordic currencies tagged along the rest of the market, with the deutsche mark posting strong gains against the Swedish krona and the Finnish markka.

In Asian trading Thursday, massive month-end export settlements pushed the U.S. dollar down against the South Korean won.

The dollar opened firm but started falling in late trade as heavy month-end export deals by major firms poured in unexpectedly.

''Major companies like Samsung unloaded large amounts of dollars in the market," one foreign dealer said.

U.S. reports Thursday of weaker-than-expected July factory orders and a slip in the August Chicago purchasing managers' survey failed to stir much interest.

The market also didn't respond to comments from Bundesbank council member

Hans-Juergen Koebnick. He said the Bundesbank follows no foreign exchange goals, predicted German consumer price inflation could fall below 2.0 percent in 1995 and said recent rate cuts show M3 money supply is still the main policy cue.

"The market is in a bad state. It's taken back a lot of money. People are now questioning whether this is a level to get in or will it go lower," said Stephen Jury, chief dealer with the Union Bank of Switzerland in New York.