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The
only major currency against which the dollar climbed further on
Monday was the yen, which hit a 2-1/2-month low of 123.495 <JPY=>,
down 0.3 percent on the day.
The euro had fallen sharply on Friday to $1.07045 <EUR=>, its
weakest since mid-April. That took the single currency's falls
to almost 6 percent in the two weeks since the European Central
Bank indicated that it would expand its asset-purchase program
and could further cut its deposit rate.
But on Monday, the single currency recovered 0.4 percent to
$1.0774. That rebound saw the dollar index, which tracks the
greenback against a basket of major currencies, fall off a
6-1/2-month high of 99.345 <.DXY>, to 98.898, down a third of a
percent on the day.
"There is some modest profit-taking...but there's more upside
risk to the dollar than downside," said BMO Capital Markets
currency strategist Adam Gallo in London.
Gallo added that Friday's U.S. retail sales number should give
currency investors further clues on how many interest rate rises
to expect in 2016.
Some analysts said the ECB's dovishness at its last meeting had
been because of the euro's strength, and the fact that the
single currency had now fallen back made another deposit rate
cut less likely, thereby providing support to the euro.
"The lower euro/dollar goes, the less need there is for the ECB
to do more," said BNP Paribas currency strategist Michael Sneyd
in London.
The U.S. non-farm payroll report on Friday showed a rise of
271,000 last month, far exceeding the 180,000 new jobs for
October economists polled by Reuters had predicted.
Following the report, 15 of 17 primary dealers, the banks that
deal with the Federal Reserve directly, said they expect it to
raise rates at its next meeting in December, according to a
Reuters poll.
Even ahead of the robust jobs data, some investors had begun
betting on a rate increase. Speculators bolstered bullish bets
on the U.S. dollar in the week through Nov. 3, as net
long-dollar positions climbed to their highest in more than two
months, according to Reuters calculations and data from the
Commodity Futures Trading Commission released on Friday.
(Reporting By Jemima Kelly; Editing by Angus MacSwan)
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