Investing.com - The dollar fell against the yen on Monday, pulling back from five-week highs after the Bank of Japan tempered expectations for additional monetary easing later this month.
USD/JPY was down 0.55% to 103.31. The pair had hit highs of 104.31 on Friday, the most since July 29.
BoJ Governor Haruhiko Kuroda indicated Monday that he is prepared to ease monetary policy further in order to reach the banks 2% inflation target.
But he also acknowledged negative interest rates could undermine confidence in Japan's banking system, signaling that the bank is aware of the mounting costs of its stimulus program.
The remarks dampened expectations that the BoJ could ease monetary policy again at its upcoming policy review later in the month.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.16% to 96.52, holding above the one-week low of 95.17 struck after Friday’s nonfarm payrolls report.
The U.S. economy added 151,000 jobs last month the Labor Department said, below the jobs growth of 180,000 that economists had expected.
The data dampened expectations that the Federal Reserve will raise interest rates again this year.
The U.S. central bank raised interest rates for the first time in almost a decade in December.
Expectations of higher interest rates typically boost the dollar by making it more attractive to yield seeking investors.
Sterling was higher, with GBP/USD rising 0.23% to 1.3324 after data showing that activity in Britain’s service sector rebounded strongly last month from a slowdown prompted by June's vote to exit the European Union.
The euro was little changed, with EUR/USD at 1.1157.
In the euro zone, data on Monday showed that service sector activity grew at the slowest rate since the start of last year, suggesting the bloc's economy is losing momentum.