Dollar falls; U.S. jobs report and Fed comments weigh

A U.S. $100 dollar bill is seen December 17, 2009.

NEW YORK (Reuters) - The U.S. dollar slipped for the second straight trading day on Monday as last week's disappointing U.S. jobs data again pushed investors to sell and comments from a Federal Reserve official that U.S. interest rates should stay low for some time further eroded support.

A surge in Chinese exports increased optimism the global economy is recovering and boosted risk appetite, driving investors to move out of the U.S. dollar into higher yielding investments. The news helped lift commodity-linked currencies, such as the Australian dollar, as well as the euro.

"The combination of the weak jobs report last week and the realization that the Fed is going to keep rates low for a long time has put a stop to the recent dollar rally," said Vassili Serebriakov, a currency strategist, at Wells Fargo Bank.

The U.S. government on Friday reported that U.S. employers cut 85,000 jobs last month, disappointing many investors who had hoped, if not expected, the economy had stopped shedding jobs.

Serebriakov said the Chinese export news helped spark buying in commodity currencies. "Chances are the dollar will be weaker this week," he said.

The greenback extended declines on Monday after St. Louis Federal Reserve Bank President James Bullard said interest 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 euro rose 0.7 percent to $1.4514, having hit its highest level in more than three weeks at $1.4557. The next big resistance is seen at around $1.4570 and a break of that would suggest a gradual recovery toward $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.

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 January 5, and traders say that trend is likely to pick up.

But Geoffrey Yu, a currency strategist at UBS AG in London, said UBS still expects the dollar to eventually strengthen if the greenback continues its shift to being a growth currency instead of a safe haven.

For a link to a discussion on Reuters Insider on Monday's fall in the dollar, click on link.reuters.com/heq52h

The dollar fell 0.6 percent against the Japanese yen to 92.07 yen while sterling was up 0.5 percent against the dollar at $1.6109.

The Australian dollar earlier struck a five-week high versus the U.S. dollar of, buoyed by the unexpected jump in Chinese exports [ID:nTOE60900L]. The aussie last traded up 0.7 percent at US$0.9306.

The Australian dollar is the best performing currency year to date of all majors tracked by Reuters against the U.S. dollar with a 3.7 percent advance in the first 11 trading days of 2010.

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 franc against the euro.

Hildebrand's remarks sparked concern the SNB may intervene to keep the franc from appreciating after the euro earlier hit a 10-month low. The euro last traded little changed against the Swiss franc at 1.4749 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. The European Central Bank also meets later in the week.

(Reporting by Nick Olivari; Additional reporting by Vivianne Rodrigues in New York and Jessica Mortimer in London; Editing by Leslie Adler)