SINGAPORE: The dollar hit a one-month low versus the yen on Monday, extending losses after last week's lower-than-expected US jobs figures bolstered views the Federal Reserve could yet adopt more monetary easing to support the economy.
Even as the unemployment rate fell to a three-year low of 8.2 percent, job growth slowed to 120,000 last month, the US Labor Department said on Friday, the smallest increase since October.
The disappointing jobs data rekindled market speculation the Fed may eventually launch another bond-buying programme, and triggered a rally in Treasuries and a sell-off in the dollar on Friday.
The greenback could drop 1 yen or so to around 80.00 yen in the next week or two, especially when taking into account current market positioning, said Daisuke Karakama, market economist for Mizuho Corporate Bank in Tokyo.
"When you look at short positions in the yen, they haven't really decreased, and their size is still comparable to levels seen back in the summer of 2007," Karakama said.
"You have to think about whether that is sustainable or not, and I don't think that can persist. At some point such positions have to be unwound, and the US jobs data provided the impetus for that."
The dollar fell to as low as 81.19 yen on trading platform EBS at one point, its lowest level since early March, before changing hands at 81.46 yen, down 0.2 percent from late US trade on Friday.
One possible support for the dollar lies at 81.07 yen, the 38.2 percent retracement of its rally in February to March.
The latest data from the US Commodity Futures Trading Commission shows that currency speculators slightly trimmed their net short positions in the yen in the week ending April 3 to 65,108 contracts.
That was still close to the prior week's 67,622 contracts, which was the biggest net short position in the yen since July 2007.
The yen rose broadly, with the euro hitting a fresh one-month low of 106.18 yen. The single currency last stood at 106.41 yen, down 0.4 percent.
Against the dollar, the euro dipped 0.2 percent to $1.3065 , but stayed above a three-week low of $1.3035 marked on Thursday.
UNDER PRESSURE
The single currency had come under pressure last week after weak demand at a Spanish bond auction rekindled worries about the euro zone's sovereign debt crisis.
One event risk for the yen this week is the Bank of Japan's two-day policy meeting that starts on Monday.
The BOJ is seen refraining from easing monetary policy and holding fire until it unveils its long-term economic and price forecasts two weeks later.
The BOJ's policy has been in the spotlight since its surprise monetary easing in February triggered a broad fall in the yen.
Trade is likely to be thinner than usual on Monday, with financial markets in Australia and New Zealand as well as many parts of Europe closed for Easter.