FOREX-Dollar slides as weak jobs data spurs Fed policy rethink
* Dollar hits four-week low vs yen * Dollar doubts could increase if Tuesday retail data soft * Aussie hits one-month high, kiwi at eight-week peak By Curtis Skinner NEW YORK, Jan 13 (Reuters) - The dollar dropped to its lowest level in four weeks against the yen on Monday, as last week's soft U.S. jobs data dampened optimism about the outlook for the world's largest economy. The dollar's weakness helped push the Australian dollar to a one-month high and the New Zealand dollar to an eight-week high against the greenback. The greenback fell to its weakest point against the yen since Dec. 18, to 102.86 yen. It was last down 1.17 percent at 102.89 yen. "Dollar/yen is having a clear aftershock reaction to the very weak (non-farm payroll) number, because the number reset expectations across all markets -- including interest rate markets, which are very important to dollar/yen," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. "And there's anticipation that tomorrow's retail numbers are going to be soft. If that number is soft, it's just going to compound the problem," he said. The dollar continued its slide against the yen after Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, highlighted concern about the still-struggling U.S. labor market. Dollar/yen was one of the strongest-performing major currency pairs last year, and many hedge funds have been betting the trend will continue as the Fed cuts back its huge bond-buying program while the Bank of Japan continues to provide even more stimulus this year. But many traders were taken by surprise by Friday's U.S. jobs report for December, which showed the creation of just 74,000 new jobs, well short of the 196,000 that analysts had expected. The data tempered some expectations for the Fed's rapid reduction of bond-buying stimulus, though one bad labor market report isn't likely to deter the Fed from reducing monthly bond purchases, now at $75 billion. Yields on 10-year U.S. Treasuries, which were above 3 percent in the middle of last week, have fallen to around 2.83 percent, their lowest since mid-December, lending less support to the dollar. The implied yields on Fed funds futures also tumbled as markets pushed back the timing of the first interest rate hike out toward late-2015 from mid-2015. Investors were also looking for direction with Japanese financial markets closed on Monday for a public holiday. The yen, up broadly against major currencies on Monday, also pushed higher versus the euro, which fell 1.19 percent to 140.64 yen. The euro touched a low of 140.48 yen, its lowest level in six weeks. The euro was unchanged against the dollar at $1.3667, staying above a one-month trough of $1.3548 hit on Thursday. Volumes were high in the Australian dollar, which has been weak against the U.S. dollar in recent months after comments by the central bank governor saying he would prefer to see the local dollar lower. The Aussie hit a one-month high of US$0.9054 , however, and was last at US$0.9058, up 0.72 percent. The New Zealand dollar touched an eight-week high of US$0.8387, and was last at US$0.8365, up 0.8 percent. The Canadian dollar headed back toward its lowest level in more than four years against the greenback after data showed that Canada unexpectedly shed jobs last month. The loonie, which fell in every session last week against its U.S. peer, last stood at C$1.0854 per dollar. The U.S. dollar had scaled a peak of C$1.0944 on Friday, the greenback's strongest level since October 2009.
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