January 13, 2014 / 3:10 PM / 4 years ago

CORRECTED-FOREX-Dollar stumbles as weak jobs data spurs Fed policy rethink

(Corrects third paragraph to show that Joe Manimbo is at
Western Union Business Solutions, not Commonwealth Foreign
    * Dollar hits six-week low vs yen
    * Aussie hits one-month high, Kiwi at eight-week peak
    * No relief for the Canadian dollar

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Jan 13 (Reuters) - The dollar dropped to its
lowest in four weeks against the yen on Monday as last week's
soft U.S. jobs data dampened optimism about the outlook for the
world's largest economy and fueled uncertainty as to the pace of
the Federal Reserve's reduction in stimulus.
    The dollar's weakness also helped push the Australian dollar
to a one-month high and the New Zealand dollar to an 8-week high
against the greenback.
    "An unexpectedly weak jobs report has fanned uncertainty
about the outlook for Fed policy plans," said Joe Manimbo,
senior market analyst at Western Union Business Solutions in
    "The dollar would be vulnerable to further signs of U.S.
fragility which would run the risk of buying the Fed more time
to keep currency-pressuring policies in place for longer."
    In early New York trading, the dollar slid nearly 1.0
percent against the yen to 103.13 yen, after earlier falling to
102.97, its lowest level since Dec. 18. 
    Dollar/yen was one of the strongest-performing major
currency pairs last year and many hedge funds have been betting
the trend will continue as the Fed cuts back its huge
bond-buying programme even as the Bank of Japan continues to
provide even more stimulus this year.
    But many traders were taken by surprise by the U.S. non-farm
payrolls data, which showed a rise of 74,000, well short of the
196,000 analysts had expected. 
    Yields on 10-year U.S. Treasuries, which were
above 3 percent in the middle of last week, have fallen to
around 2.85 percent, their lowest since mid-December, lending
less support to the dollar.
    The implied yields on Fed funds futures <0#FF:> also tumbled
as markets pushed back the timing of the first interest rate
hike out towards late-2015 from mid-2015.
    Investors were also looking for direction with Japanese
financial markets closed on Monday for a public holiday.
    "The market is taking its leads from U.S. Treasury markets,
which are generally weighing on the dollar across the board,"
said Adam Cole, global head of FX strategy at RBC Capital
    "One of the strongest consensus views was that the dollar
would outperform. Markets didn't have a (jobs) number like that
on the radar at all." He said he expects the dollar to soften
against the yen this quarter.
    Dollar selling against major currencies was driven by
computer portfolios, according to one London-based trader.
    The yen also pushed higher versus the euro, which fell
nearly 1.0 percent to 140.89 yen. The euro touched a
low of 140.48 yen, its lowest level in six weeks.
    The euro was down slightly against the dollar at $1.3657
, staying above a one-month trough of $1.3548 hit on
    Volumes were high in the Australian dollar, which has been
weak against the U.S. dollar in recent months after comments by
the central bank governor saying he would prefer to see the
local dollar lower. The Aussie hit a one-month high of US$0.9077
 and was last at US$0.9075, up 0.69percent.
    The New Zealand dollar touched an eight-week high of
US$0.8387, and was last at US$0.8371, up 0.8 percent.
    The Canadian dollar headed back towards its lowest in more
than four years against the greenback after data showed the
country unexpectedly shed jobs last month. 
    The loonie, which fell in every session last week against
its U.S. peer, last stood at C$1.0869 per dollar. The
U.S. dollar had scaled a peak of C$1.0944 on Friday, the
greenback's strongest level since October 2009.

 (Additional reporting by Laurence Fletcher in London; Editing
by Chizu Nomiyama)
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