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Dollar takes a dive below ¥98.50

JIJI

The dollar retreated below ¥98.50 in Tokyo trading Monday, dampened by a slowdown in U.S. jobs growth.

At 5 p.m., the dollar was at ¥98.40-42, down from ¥99.57-61 at the same time Friday. The euro was at $1.3287-3289, up from $1.3218-3222, and at ¥130.74-77, down from ¥131.62-69.

“The dollar’s upside is capped by weaker than expected U.S. jobs data” for July, said an official at a foreign exchange brokerage.

“Expectations that the U.S. Federal Reserve could soon begin to scale back its quantitative monetary easing have somewhat receded,” an official at a major Japanese bank said.

But an official at another major Japanese bank said that “the U.S. jobs report failed to meet market expectations, but it didn’t show any major slowdown.”

“Market players will be focusing on the Fed’s possible cut in quantitative easing in the run-up to its policy-setting meeting in September, but for now the market seems to have run out of incentives,” an official at a foreign-affiliated securities firm said.

A U.S. government report released Friday showed that nonfarm payrolls in July increased by 162,000, falling short of the previous month’s growth of 188,000 as well as market expectations for an increase of around 185,000.

The greenback was also pressured by a pullback in Tokyo stocks following sharp gains last week, traders said.

The greenback briefly climbed above ¥99 in morning trading after being supported by periodical demand from Japanese importers.

Major domestic economic events to come this week and the next include a two-day policy-setting meeting of the Bank of Japan from Wednesday and the release on Aug. 12 of Japan’s gross domestic product data for April-June.

The greenback was also pressured by a pullback in Tokyo stocks following sharp gains last week, traders said.

“Depending on readings in the upcoming GDP report, the market could focus on the government’s response ahead of the planned consumption tax hike next April,” an official at a Japanese bank said.