* Investors warily monitor developments in North Korea
* Liquidity seen thin due to Japan's Golden Week holidays
* Fed meeting, U.S. jobs data awaited this week
TOKYO, May 1 The dollar started the week on the
back foot on Monday, as solid European inflation data lifted the
euro and continuing tensions with North Korea underpinned the
perceived safe-haven yen.
The dollar index, which tracks the greenback against
a basket of six rival currencies, edged down 0.1 percent to
Against its Japanese counterpart, the dollar slipped 0.2
percent to 111.33.
The dollar touched a session high of 111.72 yen on Friday, a
within a few ticks of last week's nearly four-week high of
111.78 hit on April 26.
U.S. Labor Department data on Friday showed private wages
and salaries accelerated 0.9 percent in the first quarter to
mark the largest increase in 10 years, suggesting the U.S.
Federal Reserve might still hike interest rates two more times
The firm wage growth helped offset other data on Friday that
showed U.S. economy grew at its weakest pace in three years in
the first quarter as consumer spending almost stalled.
"Dollar/yen is holding up, despite the weaker U.S. GDP,"
said Masafumi Yamamoto, chief currency strategist for Mizuho
Securities in Tokyo.
"But there's geopolitical risk lingering here, so it will
probably trade with a heavy tone," he said, as market
participants continued to watch for any developments with North
On Sunday, U.S. President Donald Trump increased diplomatic
contacts with allies in Asia to secure their cooperation to
pressure North Korea its nuclear bomb and missile programs.
Tokyo markets will be closed for three days from Wednesday
for a string of holidays known as Golden Week, and many
investors take additional time off. Liquidity is likely to be
thin in Asian trading.
The Fed will meet on Wednesday this week, with no policy
changes expected this month, while the U.S. employment report
for April will be released on Friday.
The euro edged up 0.1 percent to $1.0906, underpinned
by solid euro zone inflation figures on Friday that analysts
said could prompt the European Central Bank to take a more
hawkish stance in its June statements.
Official flash estimates put euro zone inflation at 1.9
percent in the first quarter, above estimates for a rise of 1.8
percent. The ECB's target is below but close to 2 percent.
Euro short positioning eased in the week ended April 25,
according to calculations by Reuters and Commodity Futures
Trading Commission data released on Friday, after independent
centrist Emmanuel Macron came out ahead of anti-European Union
rightist Marine Le Pen in the first round of the French election
Meanwhile, net shorts on the Canadian dollar that week
ballooned to 42,642 contracts, the largest since early February
2016 as the United States worked to renegotiate the terms of its
NAFTA deal with Canada and Mexico.
The dollar edged down 0.1 percent against the Canadian
dollar on Monday to C$1.3640 after logging a 14-month
high of C$1.3697 on Friday.
(Reporting by Tokyo markets team; Editing by Eric Meijer)