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 Strong headline U.S. payrolls numbers on Friday initially boosted
the dollar against the yen, but it then erased those gains as
investors focused on less promising labor force and wages data as
well as the crisis in Ukraine.
The dollar lost further ground after a private survey showed China's
manufacturing activity remained weak in April, adding to signs that
the world's second-largest economy is losing momentum.
The data also dragged the growth-linked Australian dollar down
against the yen. China is Australia's biggest export market.
The greenback fell as low as 101.86 yen, its weakest level since
April 17 and down more than 1 yen from Friday's near one-month high
of 103.025 yen on trading platform EBS. It was last trading at 102,
still down on the day, with volumes very low on the Reuters Matching
system.
Volumes are likely to be thin this week, with Japanese markets
closed on Monday and Tuesday for public holidays. Banks in London,
the biggest market, were also shut on Monday.
RISK AVERSION
"There is risk aversion that is keeping the yen supported," said
Niels Christensen, FX strategist at Nordea, Copenhagen.
"Also, the dollar has been weighed down by the U.S. data which shows
wages are not growing fast enough to trigger worries about
inflation. As a result, tightening by the Fed is some way off, and
that is not helping U.S. yields."
Even though U.S. employers hired workers at the fastest rate in more
than two years in April, there was a large increase in the number of
people dropping out of the labor force, and weak wage growth.
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Further undermining the dollar was a drop in U.S. Treasury yields,
particularly at the long end. The benchmark ten-year yield plumbed a
three-month low of 2.57 percent and was last at 2.59 percent.
The dollar will probably stay on the defensive against the yen in
the near term, especially since market positioning is still probably
tilted toward favorable dollar bets, said Satoshi Okagawa, senior
global markets analyst for Sumitomo Mitsui Banking Corporation in
Singapore.
"In the short term, it (the dollar) will probably stay heavy,"
Okagawa said.
The yen rose broadly, with the euro shedding 0.2 percent to 141.55
yen, and the Australian dollar 0.2 percent to 94.64 yen.
The euro was steady at $1.38715, holding above Friday's intraday low
of $1.3812.
It rose to 9.0572 crowns after data showed Swedish industrial
production fell 3.8 percent in March, adding to fears about a sharp
slowdown and possible deflation.
(Additional reporting by Masayuki Kitano in SINGAPORE; Editing by
John Stonestreet)
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