TOKYO, May 2 (Reuters) - The euro dipped after several data points underscored market expectations of a smaller 25 basis point ECB hike this week, while the Aussie dollar leapt over 1% against the dollar on Tuesday after a surprise central bank rate increase.
The week is also significant in the United States with several pieces of data to be released, including job opening figures later in the day, and Friday's payrolls figures as well as a Federal Reserve meeting that wraps up on Wednesday.
The euro was last at $1.0973, flat on the day, and back below the symbolic $1.10 level after Tuesday data showed euro zone banks are turning off the credit taps and a key gauge of inflation is finally falling.
Both boost the case for a smaller interest-rate increase by the European Central Bank later this week.
The pound dipped 0.1% to $1.2482.
But investors' eyes were already turning across the Atlantic with Job Openings and Labor Market Turnover Survey (JOLTS) data due at 15.00 GMT.
"We know the Fed peak policy is in sight, they will hike 25 basis points (this week), they might keep it optional for June, and then it is all about whether they will be in a situation to cut, and we'll know more about this debate as Jolts, the Fed meeting and payrolls come in," said Samy Chaar, chief economist at Lombard Odier.
"When you think about the newsflow that is going to overtake European inflation and RBA."
Expectations of U.S. rate cuts later this year, when the European Central Bank could still be raising interest rates have underpinned gains by European currencies, especially the euro, in recent months.
CASH RATE
Earlier in the day, the Australian dollar jumped as much as 1.2% after the Reserve Bank of Australia (RBA) lifted the cash rate to 3.85% and said further tightening may be required to ensure that inflation returns to target in a reasonable time frame.
It was last up 0.94% at $0.6693.
"I would think the RBA now thinks they need to see a 4 in front of the cash rate before thinking they might be done," said Ray Attrill, head of FX strategy at National Australia Bank.
"Certainly, the data flow since April has been on the strong side," he added. "It's very probable that another one is to come, though whether it's as soon as June remains to be seen."
The New Zealand dollar followed in the Aussie's slipstream, rising 0.55% to $0.6201. <NZD=D3.
Elsewhere, the yen remained pressured by last week's Bank of Japan decision to maintain ultra-low interest rates, and the dollar gained as much as 0.23% to reach 137.78 yen for the first time since March 8. A move above 137.90 would be the highest level this year.
The yen's levels versus European currencies were more dramatic. The euro in early trade on Thursday reached 151.42 yen , a new high since September 2008. Sterling hit its highest since early 2016, and the Swiss franc is at its highest against the yen since at least 1982 according to Refinitiv data.
"The sign that the BOJ is not going to change its negative interest rate policy any time soon gave the green light for speculators to put yen carry trades back on," said Naka Matsuzawa, chief Japan macro strategist at Nomura Securities.
In carry trades, investors borrow in low yielding currencies to invest in higher yielders. With Japanese rates pinned near zero, the yen has long been an attractive currency with which to fund such trades.
"The odds of the Fed continuing on the rate hike process, rather than rate cuts, is now a bit higher," Matsuzawa said.
