Nikkei rally lifts yen

The yen surged on Monday after a near three-percent gain in Tokyo stocks, while the dollar touched a two-month low against the euro as last week's jobs data still left doubts over the pace of future US rate hikes.
Tokyo's benchmark Nikkei share average - closely correlated with the yen's movement in recent weeks - ended up 2.8 percent on Monday as oil prices slipped and expectations grew this week's Japanese data will confirm a steady recovery there.
The US economy added 248,000 non-farm jobs in May, above the 216,000 consensus forecast. April's number was also revised higher.
The data backed the market's view the Federal Reserve will raise rates by a quarter point from a 46-year low of one percent this month, making returns on dollar deposits less unattractive.
But it was not enough to fan expectations the Fed would go beyond its pledged 'measured' pace of tightening and raise by a 50 basis points in June.
"If we had seen a huge number on Friday for the payrolls the question would have been whether the Fed might go a bit further but the fact the dollar has come off suggests there's disappointment," said Neil Mellor, currency strategist at Bank of New York in London.
"There's nothing new to feed off. It's a case of watching the data come in on a day-to-day basis."
The yen rose 1.2 percent from late New York levels on Friday to 109.87 per dollar. The euro hit $1.2338, its highest level in two months and about 0.4 percent above Friday's levels, before trimming gains to $1.2322 by 1125 GMT.
No major US data is due on Monday. Traders are instead looking to this week's US producer prices and consumer sentiment due on Friday to see if they bolster the case for faster US rate rises than currently expected.
Investors also will scrutinise comments from Fed Chairman Alan Greenspan, who makes speeches on Tuesday and Thursday.
Bank of Japan's deputy governor Toshiro Muto is due to speak later on Monday in London.
The yen was sharply higher on some of its European crosses, gaining around 0.8 percent on the euro and rising against the British pound. Japan releases revised growth figures and machinery orders this week.