* Risk sentiment supports euro, hurts dollar
* Higher yielding currencies perform well
* Yen gains after suspected Japan cronyism scandal
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, March 12 (Reuters) - The euro gained on Monday and the dollar dropped as last week’s strong U.S. jobs numbers and receding fears over a trade war helped a rebound in risk appetite, with higher yielding currencies also performing well.
With little crucial economic data due in Europe, traders will focus on a meeting of the euro zone finance ministers on Monday for any comments on trade protectionism after President Donald Trump’s decision to impose some tariffs.
While the euro fell last week as the European Central Bank gave a more-dovish-than-expected meeting, traders have pushed the euro higher as they bet investors will continue to put more money into a region where the economies are booming.
“With the euro zone enjoying a massive 3.5 percent GDP current account surplus and the euro not particularly volatile, we suspect it will be very hard for [euro zone] finance officials to talk down the euro,” said Viraj Patel, an FX strategist at ING.
The euro rose to $1.2328, up 0.2 percent. The single currency, after a strong start to 2018, remains below the three-year peak hit in February of $1.2556.
The dollar, which has tended to fall when risk appetite is rising, meanwhile fell. The greenback against a basket of currencies dropped 0.1 percent.
The strong U.S. job growth data released on Friday was counterbalanced by slower increases in wages, resulting in money market traders sticking to bets that the Fed would raise interest rates three times this year, with only around a one-in-four chance seen for a fourth rate hike in 2018.
Higher-yielding currencies like the Australian and New Zealand dollars also rose, while sterling gained 0.2 percent to trade at $1.3871.
The yen, which tends to perform well when markets are anxious, gained as traders eyed a suspected Japan cronyism scandal involving the sale of state-owned land for its impact.
The name of Japanese Prime Minister Shinzo Abe’s wife was removed from documents regarding the issue, media said on Monday, as pressure mounted on the premier and his ally Finance Minister Taro Aso over a possible cover-up.
Market participants said the political developments in Japan helped temper gains in Japanese equities and lent some support to the yen.
“The yen could strengthen if this leads to uncertainty over economic policies,” said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
The dollar eased 0.3 percent to 106.51 yen, edging away from a one-week high of 107.05 yen set on Friday.
The dollar had risen against the yen last week as risk appetite improved on hopes for a breakthrough in the standoff over North Korea’s nuclear weapons programme.
The greenback also gained ground against the yen last week as fears of a global trade war receded. (Reporting by Tommy Wilkes Additional reporting by Masayuki Kitano in SINGAPORE; Editing by Toby Chopra)
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