Sharjah24 – Reuters: The dollar sank to a fresh six-week low to the yen on Monday as markets continued to wager that the Federal Reserve has less tightening to do with the U.S. economy at risk of recession.

The dollar dipped as low as 132.07 yen JPY=EBS for the first time since June 16, and was last 0.45% lower at 132.605.

The currency pair is extremely sensitive to changes in U.S. long-term Treasury yields, with the benchmark 10-year US10YT=RR hovering around 2.67% after sliding to the lowest since early April at 2.618% at the end of last week.

The dollar index =USD - which measures the currency against six counterparts, including the yen - edged down 0.18% to 105.80, slipping back toward Friday's low of 105.53, a level not seen since July 5.

The big economic focus for this week will be the monthly U.S. jobs report on Friday.

Traders currently price about 31% probability that the Fed will keep its current 75 basis-point pace of rate hikes at its next meeting on Sept. 21, with 69% odds for a smaller half point increase. FEDWATCH

The euro EUR=EBS was little changed at $1.02235, continuing its consolidation near the middle of its range over the past week and a half.

Sterling GBP=D3 was flat at $1.2183, after hitting the highest since June 28 at $1.2245 on Friday. Markets are laying 67% odds for a half-point rate hike by the Bank of England on Thursday, compared to 33% probability of a quarter-point increase. 0#BOEWATCH

The Reserve Bank of Australia sets policy on Tuesday, and is expected to deliver another half point increase, with traders seeing just a 16% chance of a smaller quarter point tightening. 0#RBAWATCH

The Aussie dollar AUD=D3 slipped 0.1% to $0.6984 on Monday, retreating after touching a six-week high of $0.7032 in the previous session.

Data from top trading partner China showed factory activity expanded at a slower pace in July.