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FOREX-Dollar falls in wake of jobs data, Fed comments

Published 01/11/2010, 09:30 AM
Updated 01/11/2010, 09:33 AM
EUR/CHF
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GC
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* Jobs data weighs on dlr; Bullard says rates to stay low

* Swiss franc turns lower after SNB comments

* Speculators cut U.S. dollar long positions (Adds comments, details, changes byline and dateline from previous LONDON)

By Vivianne Rodrigues

NEW YORK, Jan 11 (Reuters) - The dollar fell broadly on Monday in the wake of weak U.S. jobs data and comments from a Federal Reserve official that U.S. interest rates are likely to stay low for quite some time.

Demand for the U.S. currency also fell after strong Chinese export data increased optimism the global economy is recovering, boosting risk appetite. Commodity-linked currencies, such as the Australian dollar, as well as the euro rose.

Data on Friday showed U.S. employers cut 85,000 jobs last month, disappointing many who expected the economy to stop shedding jobs.

"In light of the weak headline payrolls figure on Friday, investors still appear unwilling to fully embrace improving trends within the U.S. economy," and have chosen to pull the breaks after the recent dollar bounce, said Geoffrey Yu, a currency strategist at UBS AG.

The dollar extended declines on Monday after St. Louis Federal Reserve Bank President James Bullard said rates may remain low for quite some time.

"The Fed's easy monetary policies are on hold now and shall be on hold for quite some long while into the future," independent investor Dennis Gartman said in his daily commentary. "The weak dollar is giving rise to much stronger commodity prices ... (and) much stronger equity prices."

In morning trading in New York, the dollar index was down 0.6 percent at 77.006, having hit 76.859, its weakest since mid-December. U.S. stock futures pointed to a higher market open.

Latest data from the Commodity Futures Trading Commission showed speculators cut U.S. dollar long positions -- bets the currency will appreciate -- in the week to Jan 5, and traders say that trend is likely to pick up.

Yu at UBS noted that while euro/dollar was helped on Monday by Bullard's comments, he still expects the dollar to benefit if its recent shift to growth currency status continue.

The euro rose 0.6 percent to $1.4519, having hit its highest in more than three weeks at $1.4546. The next big resistance is seen at around $1.4570 and a break of that would suggest a gradual recovery towards $1.4800, traders said.

"There is a risk -- if this move higher in euro/dollar continues -- that more people will exit dollar long positions," said Dag Muller, a strategist at SEB in Stockholm.

The Australian dollar struck a new five-week high versus the U.S. dollar of $0.9325, buoyed by an unexpected jump in Chinese export numbers, a rise in gold prices and data showing a jump in Australian job advertising.

"The global recovery story has received a shot in the arm with the quick rebound in Chinese exports. The Fed is in no hurry to tighten, Asia is leading the global recovery, so the dollar is weaker across the board," said Chris Turner, head of currency strategy at ING in London.

SWISS FRANC DIPS

The Swiss franc turned lower against the euro after Swiss National Bank (SNB) Chairman Philipp Hildebrand said the central bank would fight any excessive appreciation of the Swiss franc against the euro.

Hildebrand's remarks sparked concern the SNB may intervene to keep its currency from appreciating after the euro EURCHF=R earlier hit a 10-month low of around 1.4725 francs but it was last little changed 1.4763 francs.

The dollar's next test is expected to be during the U.S. earnings season, which kicks off this week, as well as U.S. retail sales, industrial production and inflation data.

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