By Rae Wee
SINGAPORE (Reuters) - The safe-haven dollar and Japanese yen edged higher on Monday as violence in the Middle East spooked markets, while a blowout U.S. jobs report gave the greenback a further leg up.
The risk-sensitive Australian and New Zealand dollars meanwhile fell in thinned Asian trade, with Japan closed for a holiday.
Against the euro, the yen rose more than 0.3% to 157.55, while the Aussie fell roughly 0.7% at one point to hit a session-low of 94.84 yen.
The Japanese currency last bought 149.19 per dollar.
Risk sentiment was fragile after Israeli forces clashed with gunmen from the Palestinian group Hamas over the weekend, hours after the militants launched a surprise attack on Israel in the deadliest day of violence in the country for 50 years.
"As you'd expect, there's a lot of uncertainty out there this morning in the markets," said Tony Sycamore, market analyst at IG Australia.
"Where some of these risk-aversion moves are going to play out in the (currency) space, the dollar will remain bid... (and) the yen should start to see some more support coming in, but potentially, that's more on the crosses."
Against the dollar, the euro fell 0.2% to $1.0565, while sterling slipped 0.1% to $1.2218.
The dollar index was last 0.11% higher at 106.21, drawing additional support from Friday's data showing U.S. employment increased by the most in eight months in September, potentially setting up for a higher-than-expected inflation print later this week.
"(The) resoundingly strong employment report will likely keep the (Federal Open Market Committee) on guard as it watches for signs that a tight labor market could prevent inflation from returning to 2% on a sustained basis," said economists at Wells Fargo (NYSE:WFC).
"Another rate hike before the end of the year is a possibility, but for now our base case remains that the last rate hike of the tightening cycle occurred in July."
Market pricing shows an 82% chance that the Federal Reserve will keep rates on hold at its November policy meeting.
The Aussie was last 0.24% lower at $0.6369, while the kiwi fell 0.24% to $0.5975.
In Asia, China returns from its Golden Week holiday. The country's foreign exchange reserves fell more than expected in September, official data showed on Saturday.
The offshore yuan dipped slightly to last trade at 7.3123 per dollar.