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 The euro's bounce, though, is likely to remain muted, with the
European Central Bank likely to come under additional pressure to
ease monetary policy in a bid to neutralize the impact on inflation
from a firmer currency.
The dollar index, which tracks the greenback against a basket of six
major currencies, slid to 95.218 on Friday, its lowest since Sept.
21. It last stood at 95.560, down 0.3 percent on the day.
The euro was up at $1.1270, drawing some support from the weekend
elections in Portugal where results produced no surprises. The
dollar was higher against the yen at 120.20 yen, moving away from
Friday's low of 118.68 yen, its lowest since Sept. 7.
"The U.S. jobs data was a disappointment and postpones expectations
of a lift-off by the end of this year which is not dollar positive,"
said Yujiro Goto, currency strategist at Nomura.
"At the same time, we expect the other major central banks like the
Bank of Japan and the ECB to remain dovish. So the euro's rise above
$1.13 could be capped, while dollar/yen is likely to be supported at
120 yen."
The U.S. nonfarm payrolls report showed employers added only 142,000
jobs last month, falling far short of economists' consensus
expectation for a rise of 203,000 jobs, according to a Reuters poll.
Moreover, the August figures were revised sharply lower while wages
remained muted.
That raised doubts whether the U.S. economy was strong enough to
justify the Fed's long-awaited interest rate increase, which would
be the first since 2006.
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While the Fed is still expected to be the first major central bank
to raise rates in the near future, uncertainty about the timing of
this hike has kept the dollar locked in ranges.
In contrast to the Fed, some investors believe the Bank of Japan
could unveil more easing steps perhaps as early as the conclusion of
its next policy meeting on Wednesday, which has curbed the yen's
upside.
Inflation has undershot in Japan and there has been speculation that
the BOJ could downgrade its growth and economic forecasts this week,
leaving the door open for more monetary easing later in October.
"We do not rule out any longer the possibility that the BoJ will
intervene before year-end in the attempt to offset the cyclical
downturn," said Matteo Germano, global head of multi-assets
investments at Pioneer, adding the dollar will maintain a
strengthening bias against the euro and the yen.
(Editing by Andrew Heavens)
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