* Euro loses ground after ECB spurs rate cut expectations
* Market unconvinced dollar rally has sustainability
* Dollar/yen hovers above 3-week low; down 0.5 pct for the
* Canadian dollar undermined by shock drop in employment
(New throughout, changes dateline; previous LONDON)
By Daniel Bases
NEW YORK, May 9 The euro's sharp decline from a
2-1/2 year high against the dollar extended into Friday, a day
after European Central Bank chief Mario Draghi did his best to
sap the currency's strength by threatening more monetary
The U.S. dollar, meanwhile, traded at a one-week high
against a basket of its major trading partners' currencies,
pulling it off a 20-month low.
Draghi warned after the bank's policy meeting that the
euro's strength was "a serious concern" and that the ECB was
"comfortable" with taking more action to support growth and
raise inflation at its June Meeting.
"The euro continued to fall overnight from Draghi's
comments, but that move is starting to run out of legs," said
John Doyle, currency strategist at Tempus Inc in Washington,
"He has a number of times attempted to talk down the euro
and yet they haven't done much. The testing of $1.40 on the euro
was right, but until the ECB actually acts, I don't see a
sustained rally in the dollar. The market has been calling
Draghi's bluff," Doyle said.
In mid-morning New York trade, the euro was down 0.46
percent at $1.3776, more than two full cents below highs reached
"For me it is not a game changer. As long as quantitative
easing continues in the U.S., we expect the dollar to remain
under pressure. I would expect the euro to trade higher against
the dollar next week," said Lutz Karpowitz, a currency
strategist with Commerzbank in Frankfurt.
JOBS DATA CLOBBERS CANADIAN DOLLAR
Weaker-than-expected April employment data in Canada sent a
wave of selling through the loonie. A loss of 28,900 jobs defied
forecasts for a gain of 12,000, suggesting the labor market has
The loonie hit a four-month high on Thursday but has since
pulled back to trade down 0.57 percent at C$1.0892, or 91.71
In other trading, the U.S. dollar made a steady advance.
Trading in a narrow range, it edged up 0.07 percent to 101.71
yen but was still not far from a three-week low of 101.43
yen set on Wednesday.
Sterling shed gains, dropping 0.45 percent against the
greenback to $1.6854, having earlier in the week nearly
touched $1.70, a level it has not broken since August 2009.
Trading ranges narrowed in the last hours of the week ahead
of the May 11 separatist referendum in Ukraine.
Pro-Russian separatists voted unanimously on Thursday in
favor of holding a referendum on independence, ignoring calls by
Russian President Vladimir Putin to postpone the vote to open
the way for talks with Kiev authorities.
(Additional reporting by Leah Shnurr in Toronto, Patrick Graham
in London; Masayuki Kitano in Singapore; and Shinichi Saoshiro
in Tokyo; Editing by Susan Thomas and Dan Grebler)