“Now that the Fed has firmly swung behind the risk of a weaker jobs market being greater than the risk of inflation, employment data will have to come in on the weak side to maintain both expectations for Fed easing and a weaker dollar,” Chris Turner, head of FX strategy at ING Bank NV in London, wrote in a note.

The two-year Treasury yield slipped 2 basis points to 3.62%, down from as much as 3.67% hit on Friday, its highest since Sept 2. A key focus for bond investors this week will be whether the latest payrolls reading will strengthen the market’s conviction that more Fed cuts are coming, after US growth and inflation data last week prompted a slight wavering in wagers for back-to-back cuts.

Fed Chair Jerome Powell has reiterated his view that policymakers likely have a difficult road ahead as the outlooks for the labor market and inflation face risks, causing a pullback in bets on policy easing. Swaps imply a roughly 80% possibility that the Fed will ease next month, and will cut one more time after that, in December.

The dollar took the biggest hit against the yen, weakening as much as 0.7% to 148.47 as comments from one of the Bank of Japan’s most dovish board member flagging the growing need for an interest rate rise added to speculation that a hike may come next month. The yen has scope to gain further if the country’s ruling party picks a new leader on Saturday who supports more monetary tightening.