* Yen hits lowest in more than 2-1/2 years vs dlr, euro
* Euro hits 14-month high vs dollar
* Aussie sags after China official PMI
* U.S. payrolls data next in focus
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, Feb 1 The yen hit multi-year
lows against its G3 peers on Friday, having posted its biggest
monthly decline in 12 years versus the euro as the market
positioned for more aggressive easing from the Bank of Japan.
Supported by diminishing worries about Europe's debt crisis,
the euro also hit a 14-month high against the dollar, gaining
added momentum after breaching an option barrier.
The dollar rose 0.2 percent to 91.84 yen, having hit
a high of 91.87 yen earlier on trading platform EBS, the
greenback's strongest level since June 2010.
The euro gained 0.4 percent to 124.97 yen. The
single currency touched a peak of 125.05 yen earlier, its
highest level versus the Japanese currency since May 2010.
In January alone, the single currency surged nearly 9
percent on the yen, its biggest monthly gain since December
2000, according to Reuters data.
Selling the yen has become an easy one-way bet with newly
elected Prime Minister Shinzo Abe heaping relentless pressure on
the BOJ to ease monetary policy aggressively to jolt the economy
out of a decade long malaise.
Analysts expect further weakness in the yen with some
expecting the dollar to rise to 100 yen in time.
"We expect sustained weakness in the yen because of Abe's
aggressive policy changes," Michael Sneyd, analyst at BNP
Paribas, wrote in a client note. He sees the dollar reaching 95
yen in the first quarter of this year.
In contrast, diminishing worries about Europe's debt crisis
and the European Central Bank's relatively more upbeat outlook
for the region have made the euro more attractive against the
yen and dollar.
"BIG SENTIMENT CHANGE"
The euro rose 0.2 percent to $1.3609. The single
currency climbed to $1.3624 earlier on Friday, its strongest
level against the dollar since November 2011.
"Euro goes up every day .... It's all just a continuation of
what we've been seeing lately. Same kind of portfolio shift, the
sentiment is positive," said Jesper Bargmann, Asia head of G11
spot FX for RBS in Singapore.
The euro also pushed higher as traders took aim at and
breached option barriers at 125.00 yen and $1.3600, he said.
"Money is going back into Europe... So we're seeing the
longer-term investors leaving the safe haven bets, particularly
the yen, but we've seen it in sterling as well, we've seen it in
Swiss franc," Bargmann said.
"It's a big sentiment change more than anything else," he
The Australian dollar slipped 0.2 percent to $1.0408
, coming under pressure after China's official measure
of manufacturing activity surprised on the downside, though the
impact was lessened by an upbeat reading from HSBC.
China's official purchasing managers' index (PMI) eased to
50.4 in January versus forecasts of 50.9, suggesting the economy
is making only a mild recovery.
The HSBC PMI, however, climbed to a two-year peak of
All eyes are now on U.S. jobs data due later on Friday.
David Song, currency analyst at DailyFX, said an upbeat
reading could add to the case for the Federal Reserve to slowly
move away from its easing cycle.
"We may see a growing number of Fed officials scale back
their willingness to preserve the highly accommodative policy
stance for a 'considerable time' as the world's largest economy
gets on a more sustainable path," he said.