Dollar near multi-month lows after U.S. data impact subsides

NEW YORK (Reuters) - The U.S. dollar was little changed against a basket of major currencies and hovered near more than five-month lows on Friday after traders grew less confident that stronger-than-expected U.S. economic data would alter the Federal Reserve’s dovish course.

Arrangement of various world currencies including Chinese Yuan, Japanese Yen, US Dollar, Euro, British Pound, Swiss Franc and Russian Ruble pictured in Warsaw January 26, 2011. REUTERS/Kacper Pempel

The dollar initially rebounded from recent losses after Labor Department data showed a jump in U.S. non-farm payrolls and average hourly earnings last month and a separate U.S. manufacturing report for March was better than expected.

That effect wore thin as the U.S. session continued, with traders growing skeptical that the data was enough to suggest a swifter pace of Fed rate hikes. Fed Chair Janet Yellen said on Tuesday that the central bank should proceed “cautiously” on raising rates.

“These reports don’t change the outlook significantly in terms of U.S. monetary policy,” said Eric Viloria, currency strategist at Wells Fargo Securities in New York.

The euro weakened to $1.1335 following the U.S. jobs and manufacturing data after earlier hitting a 5-1/2-month high of $1.1437. The euro rebounded later in the session, however, and was last up 0.14 percent against the dollar at $1.1394.

The dollar also weakened against the yen and hit its lowest level in a week and a half at 111.61 yen JPY=.

“This is just giving an ongoing signal of underlying yen strength,” said Alan Ruskin, global head of FX strategy at Deutsche Bank in New York, on the dollar’s weakness against the Japanese currency.

The dollar index .DXY, which measures the greenback against a basket of six major currencies, was last mostly flat at 94.615 and not far from a 5-1/2-month low of 94.319 struck on Thursday.

The failure to gain upward momentum came a day after the index posted its biggest quarterly percentage loss in more than five years, of more than 4 percent.

The dollar index was set to post its biggest weekly percentage decline since early February, of 1.6 percent. The euro meanwhile was poised for its biggest weekly gain against the dollar since the same date, of about 2 percent.

Against the Swiss franc, the dollar was last down 0.27 percent at 0.9585 franc, down from a session high of 0.9627 franc hit after the U.S. data.

Reporting by Sam Forgione; Editing by Nick Zieminski and Meredith Mazzilli