The dollar hit a five-month high against the yen yesterday and remained within touching distance of a six-week peak against the euro, as investors awaited key US data later in the week.

Trading volumes picked up after Monday's European holiday. The euro was at $1.2915, having traded between $1.294 and $1.29 since London dealers arrived at their desks. The yen was weakened by Japanese data that revealed the unemployment rate rose from 4.5 per cent in January to 4.7 per cent in February, as the economy lost 280,000 jobs.

However, US market attention was still focused on data due out later this week, including personal consumption data - containing the US Federal Reserve's preferred inflation measure - and March's employment report, which economists expect to show the creation of 220,000 new jobs.

A sharp increase in the March reading a year agotriggered a big rise in US treasury yields and put interest rate rises firmly on the market's horizon. But consensus forecasts and the "whisper number" of market rumours are not always the same thing.

In yesterday's consumer confidence data, the "jobs hard to get" measure worsened slightly, but many investors still seem to believe Friday's data could be higher than expected.

"This week is about positioning ahead of payrolls," said Kamal Sharma at Dresdner Kleinwort Wasserstein.

"Investors are not likely to take significant bets against the dollar in the run-up to the numbers."

Calm and collected do not often describe the foreign exchange markets, but analysts felt yesterday that they suited market sentiment.

As activity picked up after the Easter holiday, investors took stock of the previous two weeks' turmoil and considered whether the sell-off in riskier currencies marked a blip or a turning point in risk appetite among investors.