* Dollar cautious after choppy session on Friday
* Upbeat U.S. jobs offset by worries about Ukraine
* Failure to sustain data-inspired gains could limit USD
By Ian Chua
SYDNEY, May 5 The dollar got off to a cautious
start on Monday having staged a curious reversal late last week
that saw it erase all of the gains sparked by a strong payrolls
Data on Friday showed U.S. employers hired workers at the
fastest clip in more than two years in April, pointing to a
rebound in economic growth after a severe winter.
The dollar index initially rallied to a high of
79.852, only to then slide to a session low of 79.469. It was
last flat at 79.504.
Traders said a combination of factors took the wind out of
the dollar, including a worryingly-large increase in the number
of people dropping out of the labour force, weak wage growth and
escalating violence in Ukraine.
Further undermining the dollar was a drop in U.S. Treasury
yields particularly at the long-end, resulting in a marked
flattening of the curve. The benchmark yield plumbed
a three-month low of 2.57 percent and was last at 2.59 percent.
"Market reaction to the report suggested cautiousness in
overrating the payrolls gain," analysts at Barclays Capital
wrote in a note to clients.
One reason for the lack of a bounce could have been market
positioning as currency speculators had already slashed bets
against the greenback ahead of the jobs report.
Against the yen, the dollar was back at 102.20,
having retreated from a near one-month peak of 103.03. The euro,
which fell as low as $1.3812, recovered to $1.3874.
Other major currencies were also steadier after a volatile
session on Friday. The Aussie was little changed at $0.9278
, having swung between a one-month trough of $0.9203 and
a one-week high of $0.9322.
HSBC will release its final reading on China's manufacturing
sector at 0145 GMT. The preliminary survey released on April 23
showed the downturn in factory activity eased slightly in April
as declines in new orders and output slowed.
Any disappointment will no doubt dampen risk appetite at a
time when worries have mounted about Ukraine.
(Editing by Shri Navaratnam)