(updates, adds fresh quote)
* Yen supported as BOJ begins two-day policy meeting
* Dollar nurses losses as jobs report disappoints bulls
* Euro moves up after ECB's Nowotny comments
By Patrick Graham
LONDON, April 7 The dollar lost ground against
the yen and dipped versus the euro on Monday as U.S. jobs data
last week disappointed some who had bet on a number strong
enough to break this year's tight trading ranges.
A stronger dollar was to have been this year's big play on
major currency markets, according to many banks and investment
houses, and there were signs last week the U.S. currency was
finally set to break higher.
But non-farm payrolls on Friday was judged short of the
decisive evidence of a strengthening recovery that would usher
in much higher U.S. interest rates and lift the dollar in the
In that context, even the signs last week that the European
Central Bank is closer to outright money-printing have failed to
shift the dollar significantly higher against the euro.
"At the end of the day we had a number that was right in the
middle - enough to keep expectations of tightening by the Fed
right where they were," said Simon Derrick, currency strategist
with BNY Mellon in London.
"The amazing thing to me, however, is how much people have
just looked at the promise of quantitative easing by the ECB and
The euro did take a hit after last week's ECB meeting but on
Monday traded at $1.3726, up 0.15 percent on the day.
It was helped by comments from ECB policymaker Ewald Nowotny
who said there was no need to act immediately to counter euro
Another ECB policymaker, Yves Mersch, said that while the
central bank was drawing up plans for large-scale asset
purchases, it remained some way off.
The euro rose 0.2 percent to trade at 141.70 yen.
But the dollar lost ground against the yen, having
gained in the two weeks before Friday's payrolls numbers. It
lost 0.6 percent on Friday after the jobs data and was last at
103.24 yen, slightly lower on the day.
There is still the prospect of more money-printing to come
in Japan, however, and Monday's moves were limited by caution as
the Bank of Japan began its two-day policy meeting.
"(Expected BOJ) inaction could trigger unwinding of yen
short positions, which are based on expectation for earlier
monetary easing, and heighten upward pressure on the yen
temporarily," JPMorgan analysts said in a note.
BOJ Governor Haruhiko Kuroda might come under pressure to
take more easing action to support the economy after Japan hiked
its sales tax this month.
Data scheduled for Tuesday is expected to show Japan's
current account balance swung back to a surplus for the first
time in five months in February, helped by overseas investment
returns and slowing import growth.
A raft of ECB speakers this week are expected to flesh out
the discussions at last week's meeting.
The assumption is that there has been a change in tone, but
the jury is still out on whether the bank will ease policy
further to weaken the euro and prod growth and inflation higher.
"If you look at (ECB President Mario) Draghi's comments in
the past month, the one clear theme is that he is concerned over
the euro," Derrick said.
"And if QE has shown us one thing over the past decade, it
is that it will work to weaken the currency. It is extraordinary
in that context that we have seen so little reaction."
German newspaper Frankfurter Allgemeine Zeitung said the ECB
had modelled the effects of buying a trillion euros of assets to
ward off deflation.
(Additional reporting by Anirban Nag, editing by Nigel