* Dollar index logs record 12 straight weeks of gains
* Activity likely to be thin due to holidays, Japan typhoon
By Lisa Twaronite
TOKYO, Oct 6 (Reuters) - The dollar started the week on a strong note in early Asian trade on Monday, holding near a more than four-year high touched after an upbeat U.S. nonfarm payrolls report increased speculation that the Federal Reserve would raise interest rates in mid-2015 or earlier.
Data from the Labor Department on Friday showed U.S. non-farm payrolls rose 248,000 last month and the jobless rate fell to 5.9 percent, the lowest since July 2008, underscoring that the U.S. economy continues to improve and adding credence to speculation that the U.S. Federal Reserve will raise interest rates sooner rather than later.
Most of Wall Street's top bond firms still see the U.S. central bank starting to raise interest rates no later than June of next year and said the bond market was under-pricing the risk that the U.S. central bank may move more aggressively once it starts tightening policy, a Reuters survey showed on Friday.
Speculators once again increased their bullish bets on the dollar in the latest week to their largest since June 2013, with the value of the dollar's net long position rising to $37.36 billion in the week ended Sept. 30, from $35.81 billion the previous week. This was the seventh straight week that net longs in the dollar have totalled at least $30 billion, according to data from the Commodity Futures Trading Commission released on Friday.
The dollar index, which tracks the greenback against six major currencies, was headed for its best yearly gain in nine years, adding about 8 percent so far in 2014. It logged weekly gains for a record 12 straight weeks, and last stood at 86.636 , not far from a four-year high of 86.746 marked on Friday.
Against the yen, the dollar was up about 0.1 percent in early trading at 109.82 yen, moving back toward last week's six-year peak of 110.09 yen.
"The technical picture of dollar-yen seems fairly straight forward," Marc Chandler, chief currency strategist at Brown Brothers Harriman in New York, said in a note.
"If we are right, the dollar does not really trend against the yen except for the movement from one trading range to another, then the lower end of the new trading range appears to have been set, at least on a preliminary basis at 108 yen," he said, adding that the 110-yen level is not the top end of the range and that it could be closer to 115 yen, and could possibly even overshoot that.
Divergent monetary policy expectations also favour the dollar over the yen. The Bank of Japan will announce its latest policy decision on Tuesday and is expected to keep monetary settings unchanged, even as a slew of weak data will likely force it to cut its economic growth projections later this month.