By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — The dollar recovered some ground against the euro but fell to a month low versus the Japanese yen on Monday, as investors returned from the Easter holiday to react to the disappointing U.S. employment report released at the end of last week.
The dollar index DXY +0.09% , which tracks the dollar’s performance against a basket of other major currencies, rose to 79.982, versus 79.840 in late North American trading on Friday.
The euro EURUSD -0.12% traded at $1.3059, down from $1.3092 Friday.
U.S. equity markets were closed Friday, and opened down about 1% Monday. Read about U.S. stock futures.
Analysts noted that several financial markets in Asia, Europe and the U.K. remained closed, reducing liquidity and potentially skewing market activity.
Both the dollar and yen have, since the credit crisis, tended to benefit when traders shift out of riskier assets like equities and commodities.
On Friday, a U.S. report showed the economy added far fewer jobs than anticipated in March, raising concerns about the health of the economy’s recovery. See Friday’s currency report.
That boosted expectations that the Federal Reserve may have reason to start a third round of quantitative easing, which tends to weigh on a country’s currency.
“The bigger question is which is the bigger driver — talk of QE coming back, or disappointment at weaker jobs growth?” said Kit Juckes, head of foreign-exchange research at Societe Generale. “A continued washout of risk on positions is likely initially,” before more talk of easing in the U.S. and Japan start to turn the tide.
However, unusually warm weather has distorted the payrolls numbers for the last few months, and it remains crucial whether policy makers feel this changes their broader economic outlook, said strategists at Brown Brothers Harriman.
“Numerous Fed officials will speak this week and investors will likely learn that the employment data did not change the essential views,” they wrote in a note.
China, Japan
Analysts also noted higher-than-expected inflation in China may limit the country’s ability to ease its own policy further. See story on China’s inflation.
Against the Japanese yen, the dollar USDJPY -0.16% fell to its lowest level in a month and lately traded at ¥81.38, down from ¥81.55 Friday.
The yen’s gains came as “the Bank of Japan began its two-day policy meeting amid rising pressures for the bank to be more proactive and ease further,” said Eric Viloria, senior currency strategist at Forex.com.
The British pound GBPUSD -0.08% slipped to $1.5860 from $1.5879 late Friday.
