Dollar slips vs yen in wake of soft US jobs data

TOKYO, May 7 (Reuters) The dollar slipped against the yen on Monday after last week's soft U.S. payrolls report reinforced expectations for the Federal Reserve to lower interest rates later this year.

Data released on Friday showed the U.S. economy added a modest 88,000 jobs in April, the slimmest gain in more than two years, while the jobless rate rose to 4.5 percent from 4.4 percent in March.

The data helped temper a rally in the dollar, which had gained some reprieve last week after data showed strength in the U.S. manufacturing and services sectors.

Such data had helped the dollar pull away from record lows struck against the euro in late April.

''The payrolls data provided a factor to sell dollars,'' said a trader for a Japanese bank. ''I don't think there has been any change to a dollar-selling trend,'' he said.

The dollar may come under pressure against the yen this session as Japanese exporters return from Japan's Golden Week holidays, the trader added.

The dollar slipped to 120.05 yen as of 2352 GMT, down from around 120.20 yen in late U.S. trading on Friday and off a two-month high near 120.50 yen reached last week.

The euro was steady at $1.3591 taking a breather after hitting a record peak of $1.3683 on electronic trading platform EBS in late April.

Against the yen, the euro fell to 163.19 yen down from around 163.35 yen in late New York on Friday and off a lifetime high near 163.60 yen struck last week.

A Reuters poll showed that the soft jobs data reinforced Wall Street's view that the Federal Reserve will cut interest rates this year, although the figures were not weak enough to suggest a move was imminent.

The median forecast of 18 primary dealers who took part in the survey was for the fed funds rate to stand at 5.0 percent at the end of December. The primary dealers were unanimous in predicting that the Fed would keep rates unchanged at 5.25 percent at its policy meeting on Wednesday.

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