* U.S. data shows jobs gain, but wages point to low
* Fed's Williams sounds hawkish tone on rate hikes
* Market weighs Trump comments on financial deregulation
* Aussie slips on weak retail sales data; RBA seen standing
TOKYO, Feb 6 The dollar started the week on the
back foot on Monday, after U.S. data showed a
smaller-than-expected rise in wages in January that reinforced
expectations the Federal Reserve will refrain from raising
interest rates next month.
The dollar index, which tracks the greenback against a
basket of six major rivals, drooped 0.2 percent to 99.688
, moving back toward last Thursday's low of 99.233, which
was its weakest since mid-November.
The U.S. currency slipped 0.2 percent against the yen from
Friday's late North American levels to 112.36 yen,
retreating toward last week's late-November low of 112.05.
While the headline figure of Friday's nonfarm payrolls
report for January showed a greater-than-expected rise in job
growth, the unemployment rate edged up and wage growth was
disappointing. That implied inflation would not attain a pace
that would prompt the U.S. central bank to raise interest rates
Fed fund futures priced in a less than 10 percent chance of
a rate hike in March after the jobs data on Friday, according to
the CME Group's FedWatch. The chance of a June increase was seen
at more than 60 percent.
The Fed, which raised rates in December, has forecast three
rate increases this year. Whether it sticks to that pace depends
on labour market strength as well as if President Donald Trump's
stimulus steps succeed in boosting growth and inflation.
Still, San Francisco Fed President John Williams said on
Friday that the Fed can prepare to raise interest rates this
year without knowing details of any new U.S. fiscal policies
because inflation is firming and the labour market looks good.
While Trump's immigration curbs and renewed sanctions on
Iran grabbed most attention, he also on Friday ordered reviews
of major banking rules that were put in place after the 2008
financial crisis. Financial markets took this as a signal that
looser banking regulation is ahead.
"Trump's comments sometimes make us puzzled, and we always
have to wait for the details to see what he means," said Kaneo
Ogino, director at foreign exchange research firm Global-info Co
"The dollar's upside is a bit heavy, but there are still
people buying on dips, so range trading is likely to continue
this week," he said.
Speculators trimmed their bullish dollar bets for a fourth
straight week through Jan. 31, with net long positions falling
to their lowest since late October, according to data from the
Commodity Futures Trading Commission released on Friday and
calculations by Reuters.
Market participants and observers say that the yen could get
a lift from seasonal repatriation flows as Japanese corporations
bring home profits ahead of the close of Japan's fiscal year at
the end of March. While the repatriation trend isn't evident
every year, and its effects have waned as many exporters have
moved manufacturing operations offshore, it can still be a
factor weighing on the dollar.
"The yen typically strengthens this time of year, so we
could see the dollar push toward 110, though after that, it will
probably strengthen again," said Mitsuo Imaizumi, chief currency
strategist at Daiwa Securities in Tokyo.
Adding to the smaller-than-expected rise in U.S. wage
growth, concerns about the potential impact of Trump's policies
also dampened the dollar's outlook. Investors fretted that his
protectionist trade policies and statements about other
countries' currency manipulations would offset any dollar lift
from his stimulus policies and deregulation.
"The verbal intervention by the new U.S. administration and
the unexpected weakness in wage growth may be factors extending
the correction," Marc Chandler, global head of currency strategy
at Brown Brothers Harriman in New York, said in a note.
"Nevertheless, we continue to view the dollar's pullback as
corrective in nature and not the end of the bull run, and still
see the macroeconomic considerations falling into place for a
resumption of the underlying bull market," Chandler said.
The euro was steady on the day at $1.0782, holding
well above Friday's session low of $1.0711.
The Australian dollar slipped as retail sales for December
came in below expectations.
The Aussie fell 0.3 percent to $0.7667, moving away
from last week's three-month high of $0.7696.
The Reserve Bank of Australia (RBA) is widely expected to
hold policy steady at its rate-setting meeting on Tuesday, after
it cut rates twice last year.
(Reporting by Tokyo markets team; Editing by Jacqueline Wong &