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FOREX-Dollar falls on weak jobs data, Fed comment

Published 01/11/2010, 04:34 AM
Updated 01/11/2010, 04:36 AM
GC
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* Dollar down after U.S. jobs report, China export data

* Fed's Bullard says rates to stay low, job losses to slow

* Aussie rallies on Chinese export data, gold

* Swiss franc turns lower after SNB comments

By Jessica Mortimer

LONDON, 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.

But strong Chinese export data boosted optimism that the global economy is recovering, led by Asia. This lifted investor appetite for risk which helped the euro and commodity-linked currencies such as the Australian dollar.

Data on Friday showed U.S. employers cut 85,000 jobs last month, disappointing many who had expected the U.S. economy to stop losing jobs and offsetting a revision to November payrolls that showed 4,000 jobs were added..

The dollar extended falls on Monday after St. Louis Federal Reserve Bank President James Bullard said rates may remain low for quite some time, although he said Fed policy was unlikely to be pushed off course by December's jobs data.

"Expectations of the speed and scale of Fed tightening received a set-back from the weak payrolls numbers," said Chris Turner, head of currency strategy at ING in London.

"At the same time the global recovery story has received a shot in the arm with the quick rebound in Chinese exports. The Fed in no hurry to tighten, Asia is leading the global recovery so the dollar is weaker across the board".

By 0930 GMT, the dollar index was down 0.6 percent at 77.004, off its earlier 76.913, its weakest since mid-December.

The 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.

The euro rose 0.7 percent to $1.4517 having hit its highest in more than three weeks at $1.4537. The next big resistance is seen around $1.4570 and a break of that would suggest a gradual recovery towards $1.4800, traders said.

The dollar fell 0.3 percent to 92.35 yen.

The Australian dollar struck a new five-week high versus the U.S. dollar of $0.9319, buoyed by an unexpected jump in Chinese export numbers, and rallied to a 26-month high versus the euro of 0.6442 euros.

The Aussie was also bolstered by a rise in gold prices. Spot gold rose to a five-week high early on Monday.

SWISS FRANC DIPS

The Swiss franc turned lower against the euro after Swiss National Bank 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 earlier hit a 10-month low of around 1.4725 francs. By 0855 GMT it was up 0.1 percent at 1.4771 francs.

For an analysis on the Swiss franc and market concerns about possible intervention click on

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

"The new year is beginning with a gradual unwind of December's dollar rally, as the notion of early Fed tightening is put to rest," JPMorgan said in a report.

The euro's gains may be limited, however, due to concerns about the sovereign debt of some euro zone countries.

Compounding worries about fiscal problems in Greece, the Financial Times reported on Monday that Portugal has been warned about a threat to its ratings..

(Additional reporting by Anirban Nag in Sydney and Vidya Ranganathan in Singapore, editing by Nigel Stephenson)

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