* Dollar hovers near 99 yen, focus on 100 yen resistance
* U.S. jobs data boosts risk sentiment, weighs on yen
* Dollar index stays well above last week’s 2-month low
By Masayuki Kitano
SINGAPORE, May 6 (Reuters) - The dollar inched higher versus the yen on Monday, clinging to gains made late last week after better-than-expected U.S. jobs data eased concerns about the outlook for the world’s largest economy.
U.S. employment rose more than expected in April and hiring was much stronger than previously thought in the prior two months. The jobless rate also fell to 7.5 percent, the lowest since December 2008, data showed on Friday.
The dollar rose 0.1 percent to 99.09 yen, after climbing 1 percent on Friday.
With the better-than-expected U.S. jobs data bolstering risk sentiment, the yen is likely to stay on the defensive, especially on the crosses, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
“Rather than dollar strength, the sentiment is more along the lines of going risk-on. It feels like yen-selling with cross/yen pairs leading the way,” Okagawa said.
The yen had retreated broadly on Friday, with the higher-yielding Australian dollar having surged roughly 1.8 percent versus the Japanese currency, and the New Zealand dollar rising 1.6 percent on the yen.
U.S. equities also rallied, with the Dow and the S&P 500 setting all-time closing highs on Friday.
Against this backdrop, the dollar will probably trade roughly between 95 yen to 100 yen in the short term, said Sumitomo Mitsui Banking Corporation’s Okagawa.
The dollar, which hit a four-year high of 99.95 yen in April after the Bank of Japan unveiled its drastic monetary stimulus, has seen its rally stall in recent weeks after facing stiff resistance near the psychologically important 100 level.
Still, many market players expect the dollar to eventually rise beyond 100 yen, partly on expectations for Japanese investors to step up their overseas investment in search of higher yields.
The BOJ’s easing has also put renewed focus on the yen as a funding currency for carry trades, in which investors sell low-yielding currencies such as the yen to invest in higher-yielding currencies and assets.
With Japanese markets closed on Monday for a public holiday, trading volumes in the yen could be lighter than usual.
The dollar stood at 82.074 versus a basket of currencies, having pulled away from a two-month low of 81.331 set last Wednesday.
The euro edged up 0.1 percent to $1.3123.
The single currency’s top side could be limited after the European Central Bank’s president, Mario Draghi, said on Thursday that the bank was technically ready for negative deposit rates and noted downside risks to the economy.
A negative deposit rate would penalize banks for hoarding cash and could drive money out of the euro zone.
ECB policymakers, however, played down on Friday prospects of the bank cutting its deposit rate below zero any time soon, saying it was just one of several possible treatments for the sickly euro zone economy.
The Australian dollar slipped 0.2 percent to $1.0297 , with the near term focus on Australian data including first quarter retail sales due later on Monday, and the Reserve Bank of Australia’s interest rate decision on Tuesday.
Markets are implying a little more than a 50-50 chance of a quarter-point cut to a record low of 2.75 percent. A Reuters poll, however, shows that 18 out of 22 economists see the RBA keeping interest rates unchanged at 3.0 percent.