* U.S. jobs data fuels talk of more Fed policy easing
* Dollar bids seen at Y84.90-85.00, stop-losses below that
* Activity light, with public holiday in Singapore
* BOJ starts 2-day board meeting, no policy moves expected
By Rika Otsuka
TOKYO, Aug 9 (Reuters) - The dollar dipped against the yen on
Monday, slipping towards a 15-year low after a disappointing U.S.
July payrolls report boosted talk the Federal Reserve could
consider further easing monetary policy as early as this week.
The dollar stood at 85.43 yen <JPY=>, down 0.1 percent from
levels seen in late U.S. trade on Friday when it hit an
eight-month trough of 85.02 yen on trading platform EBS.
Players were nervously watching whether the greenback would
fall beyond its November low of 84.82 yen, which would take it to
its lowest in 15 years.
A fall beyond the November milestone could open the way for
the greenback to slide to an all-time low below 80 yen, hit in
1995, and could fuel talk of Japanese intervention to rein in the
yen's climb.
Data from the U.S. Commodity Futures Trading Commission on
Friday showed that speculators are betting on such a scenario,
having increased their net yen long position to the highest level
since December. []
There was light selling of the dollar against the yen in
early Asian trade, while profit-taking and hedging related to
knock-out option barriers at around 85 yen supported the dollar.
Hefty buy orders were seen in the 84.90-85.00 yen area, but
below that awaits a minefield of stop-loss orders, as option
market makers will need to sell back the dollar once those
knockout triggers are hit.
"If the dollar breaks below 85 yen, I would say it could fall
below 84 yen quite fast, though it could also rebound fast once
its drop has run its course," said a trader at a Japanese bank.
Data on Friday showed that overall U.S. non-farm payrolls
fell 131,000 in July, while private employment, a better gauge of
labour market health, rose a modest 71,000, below forecasts for a
gain of 90,000. []
"Figures in the U.S. jobs data were poor, supporting views
that the dollar will further weaken against the yen, although
there is no sense of panic in the market," said a trader at a
European bank.
"Most players now expect the Fed to discuss additional steps
to relax its monetary policy tomorrow. In fact, it's so priced
into the market that share prices could fall if the Fed doesn't
do it," the trader said.
The Fed's policy-setting committee meets on Tuesday.
The employment report has sent two-year U.S. Treasury yields
to record lows, further hurting the dollar's yield appeal. []
The positive correlation between U.S. and Japanese two-year
yield spreads, which have been narrowing, and the dollar/yen rate
has strengthened to its highest since the period just after the
Lehman-shock two years ago.
Given that correlation, players believe it is only a matter
of time before the dollar hits a 15-year low against the yen.
Activity was subdued in Asian trade as financial markets in
Singapore were shut for a national holiday, while many Japanese
investors were gone for the summer "Obon" holidays this week.
CENTRAL BANK MEETINGS IN FOCUS
Traders and analysts said the dollar is seen extending its
slide if the Fed considers, or even launches, an additional
policy easing measure on Tuesday to help support a U.S. recovery
that looks as if it is losing momentum.
"The dollar is highly likely to fall below 85 yen, possibly
dropping beyond 84 yen if the Fed mentions a concrete plan to
help the economy," said Masafumi Yamamoto, chief FX strategist at
Barclays Capital.
"Meanwhile, a sense of urgency is still missing among
Japanese authorities with regards to possible market
intervention."
The Bank of Japan also meets this week. As long as the yen's
climb is a gradual one, the central bank is likely to stand pat
on policy at its Aug. 9-10 meeting and stick to its view that
Japan's economy is on track for a moderate recovery.
But it is closely watching market moves and may consider
easing policy further if the yen soars towards an all-time high
against the dollar at a pace fast enough to damage business
sentiment. []
The euro was steady on the day at $1.3281 <EUR=>, staying
within sight of a three-month peak of $1.3334 struck on Friday.
The dollar's general weakness could keep the euro buoyant in
the near term, but profit-taking on a rally in euro/dollar is
expected to increase as the euro approaches the psychologically
key 1.3500 level. That level almost coincides with a 50 percent
retracement of the single European currency's fall from a
November peak of $1.5145 to a four-year trough of $1.1876 hit in
June.
Analysts said the greenback could benefit when investors
pocket profits on the euro. The dollar is also likely to receive
support as the dollar index approaches technically important
levels, such as its April low of 80.031 and March trough of
79.507, analysts said.
The dollar index was little moved at 80.377 <.DXY>.
(Additional reporting by Hideyuki Sano with a contribution from
Reuters analyst Krishna Kumar in Sydney; Editing by Michael
Watson)
