* Dollar back on back foot after Friday blip higher
* Euro at top of ranges after strong PMI surveys
* Yen holds firm, stays within sight of 2-week high vs
* Aussie steady after brief bounce on RBA policy statement
(New throughout, changes dateline from previous SINGAPORE)
By Patrick Graham
LONDON, May 6 The dollar slid to an almost
seven-week low against the euro on Tuesday, losing all of the
positive shine from Friday's strong U.S. jobs data.
The greenback's bad performance so far this year has seen
banks back off a raft of bets for dollar gains put on in
January. Many traders and strategists now talk instead about
there being no end in sight to the euro's strength.
As European trade got going after Britain's long holiday
weekendm, the dollar fell to 79.24, its lowest against a basket
of currencies since late October.
The euro, helped by strong surveys of service sector
purchasing managers in Spain and Italy, rose 0.3
percent compared to levels seen in thin volumes on Monday to hit
$1.3928, its highest since March 19.
Increasingly, at the heart of the dollar's weakness is a
lack of conviction that the U.S. Federal Reserve, whatever the
brighter economic data, will follow a reining in this year of
its emergency money-printing with an actual rise in interest
"The dollar got a brief boost on Friday but the fact we are
back where we were tells you everything you need to know about
the forces currently at play," said Neil Mellor, strategist with
Bank of New York Mellon in London.
"We had a good figure but no-one wants to own the dollar.
Raising interest rates in the U.S. is still a very fuzzy
concept. Until we hear that definitively the Fed is planning a
rate rise, the euro and others will remain attractive."
Against the yen, the dollar slipped 0.1 percent to about
102.00 yen, staying within sight of Monday's two-week low
of 101.86 yen. Japanese markets themselves were closed on
Tuesday for a public holiday.
On the upside, the euro remains limited by the ECB's
vociferous opposition to any rise above $1.40. Yet there is
little hope of action - rather than just talk - to weaken the
currency at a policy meeting this week.
"Following some verbal toing and froing on the part of the
ECB the market now seems to be certain that there will be no
further momentum from that direction," analysts Dutch bank ING
said in a morning note.
BNY Mellon's Mellor said the ECB had already pointed to
June's new macroeconomic forecasts as a more likely focus for
"There is the possibility of a rate cut but would that even
have any impact on the euro? We've had rate cuts previously and
they have had no effect," said Mellor.
Also profiting from the U.S. dollar's weakness, the
Australian dollar gained 0.3 percent to $0.9283. The
Reserve Bank of Australia kept interest rates unchanged and said
the currency was high historically, although it refrained from
calling for it to fall, as it has done in the past.
Some analysts said the RBA's view on the economy also seemed
a bit more upbeat than before.
"There seems to be a slightly more positive tone to the
statement itself. If you look at what they are saying about the
labour market, they are saying that they have seen some
improvement in indicators for the labour market," said Divya
Devesh, FX strategist for Standard Chartered Bank in Singapore.
(Editing by Andrew Heavens)