* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Saikat Chatterjee
LONDON, May 10 (Reuters) - The dollar held at 2-1/2 month
lows on Monday as a weak U.S. employment report spurred
investors to unwind growing long positions in the greenback,
with major rivals including the British pound and Australian
dollar testing key levels.
The dollar index =USD , which measures the greenback
against six rivals, stood at 90.13, broadly flat on the day,
after dipping as low as 90.128 for the first time since Feb. 26
earlier in the session.
The greenback's losses in London trading were at odds with
the broader markets where equity prices were higher and
benchmark U.S. Treasury yields well above Friday's lows.
"There are plenty of key technical levels now broken on the
pound and the Aussie, and without support from a Fed unwilling
to taper, let alone raise rates, the dollar could have some hard
sessions ahead," said John Marley, CEO of forexxtra, a
London-based FX consultancy.
The United States created a little more than a quarter of
the jobs that economists had forecast last month and the
unemployment rate unexpectedly ticked higher, casting doubt on
whether the Fed would consider advancing the timeline for
tightening policy in the coming months. "The more erratic the recovery on the U.S. labour market,
the longer the Fed will take to consider rate steps,"
Commerzbank strategists said in a daily note.
Even before the big payrolls miss, Fed Chair Jerome Powell
had argued the U.S. labour market is far short of where it needs
to be to start talking of tapering asset purchases, and that a
near-term spike in inflation will be transitory.
Several Fed officials will have a chance to reinforce that
message this week, beginning with Governor Lael Brainard on
Tuesday.
POUND SOARS
The British pound GBP=D3 was the biggest gainer among the
most-traded currencies, rallying 0.8% above $1.41, the highest
since Feb. 25. This was despite Scotland's leader saying that
another referendum on independence is inevitable after her
party's resounding election victory.
Such a referendum requires the backing of the UK government
in London and Prime Minister Boris Johnson has ruled out holding
another vote, saying the country faces more pressing challenges
such as economic recovery from the coronavirus pandemic.
The Australian dollar was another beneficiary of the
weakening dollar trend, with a surge in commodity prices also
supporting the Antipodean currency.
The Aussie dollar AUD=D3 traded close to a
more-than-two-month high at $0.7884, while the U.S. dollar
CAD=D3 fell to a fresh 3-1/2-year low of $1.2111 against its
Canadian rival.
The euro EUR=EBS rose 0.1% to $1.2170, earlier touching
the highest since Feb. 26 at $1.2177.
"The unexpected slow recovery in the U.S. labour market
reinforces the FOMC's patient approach to monetary policy,"
while "the improving global economic outlook is a medium-term
weight on the USD," Commonwealth Bank of Australia strategist
Kim Mundy wrote in a client note, predicting a break above $1.22
for the euro.
That view was shared by JP Morgan strategists, who cut their
net long dollar positions against a basket of G10 currencies,
notably the euro and the Antipodean currencies. Broader
positioning data also revealed a similar trend.
In cryptocurrencies, ether ETH=BTSP> extended this month's
record run, surging more than 5% to an unprecedented $4,148.88.
The second-biggest digital token has rallied 41% so far in May.
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World FX rates https://tmsnrt.rs/2RBWI5E
USD positions https://tmsnrt.rs/3xWuzMe
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