Hot Now: Yen lurks below 4-month high

LONDON: The Japanese yen weakened against its main rivals on Monday, lurking below a four-month high against the dollar, as investors looked to add bets playing into the divergence between rising Western government bond yields and a dovish Bank of Japan.

Bank of Japan Governor Haruhiko Kuroda on Monday reiterated the central bank's resolve to maintain its massive stimulus programme until inflation is stably above its 2 percent target.

"Carry trades are back in vogue and that can be seen in the yen's price action this morning but we should see some consolidation before Yellen's testimony this week," said Sue Trinh, head of Asia FX strategy at Royal Bank of Canada in Hong Kong.

Against the dollar the yen was trading at a two-month high at 114.28 after Friday's robust payrolls data.

U.S. job growth surged more than expected in June and employers increased hours for workers, signs of labour market strength that could keep the Federal Reserve on course for a third interest rate hike this year despite sluggish wage gains.

Bond yields have also diverged in recent weeks, helping carry trade punters, with the spread between 10-year US.