FOREX-Dollar eases on defiant economic hopes, negative rates spectre

* Risk-on sentiment pushes down dollar against riskier
currencies
* Talk of negative U.S. interest rates another disadvantage
* U.S. April payrolls seen falling a record 22 mln

By Hideyuki Sano
TOKYO, May 8 (Reuters) - The dollar slipped on Friday as
investors defied a broader sense of doom around upcoming U.S.
employment data and found reasons to buy riskier currencies with
more governments slowly reopening their economies for business.
The greenback was undermined by a further hit to its yield
attraction as U.S. money markets priced in a small chance of
negative interest rates next year.
The dollar's index against a basket of six other major
currencies slipped to 99.829 =USD from Thursday's high of
100.40.
The euro edged back to $1.0835 EUR= from Thursday's near
two-week low of $1.07665 though it was down about 1.3% on the
week.
The Australian dollar traded at $0.6505 AUD=D4 after a
gain of nearly 1.5% in the previous session.
The dollar's retreat against riskier currencies reflected a
recovery in risk sentiment as global shares rallied, with Nasdaq
index now wiping out its losses this year. .N
On top of aggressive monetary easing around the world, hopes
of economic normalisation are supporting the mood as some
countries in Europe and parts of the United States ease
restrictions on economic activity.
Against the safe-haven yen, the dollar bounced back to
106.295 yen JPY= , from a seven-week low of 105.985 touched on
Wednesday.
The greenback was also caught off guard as U.S. short-term
bond yields hit record low with markets starting to price in
negative U.S. interest rates for the first time. Although Federal Reserve officials have said that they do
not see negative rates as appropriate, the price action
suggested some investors see a much worse downturn that could
force the Fed to become more experimental with its crisis
response.
Data on Thursday showed 3.169 million initial unemployment
claims for the week ended May 2, more than economists' forecast
of 3 million, and bringing total claims since late March to 33.5
million, or about one in every five workers. The unemployment data due later in the day is expected to
show a historic hit to the U.S. labour market.
Nonfarm payrolls are forecast to have plunged 22 million in
April, which would blow away the record dive of 800,000 seen
during the 2007-2009 recession.
The unemployment rate is seen jumping to 16% in April, which
would shatter the post-World War Two record of 10.8% touched in
November 1982.
Some traders sold dollars to take profits ahead of the data.
"Everyone knows it is going to be terrible and people are
focusing on the pace of a rebound from there," said Ayako Sera,
market strategist at Sumitomo Mitsui Trust Bank.
"But because this is an unprecedented pattern, you cannot
find any historical example, and where there is no example, even
artificial intelligence cannot find an answer."