Early trade in New York: Dollar languishes at 10-week lows after weak jobs report

NEW YORK: The dollar held at 2-1/2 month lows on Monday as a weak US employment report spurred investors to ditch the US currency, pushing major rivals including the British pound and Australian dollar higher.

The dollar index, which measures the greenback against six rivals was last at 90.051, down 0.11% on the day, its lowest since Feb. 25. Yields on Treasuries with mid-range maturities - between five- and 10-years - were also lower on Monday morning, reflecting expectations the Federal Reserve will maintain its dovish monetary policy for the next few years.

The dollar was lower, not only because of the prospect of a slower US economic recovery, but also because the Fed’s stimulative policies - including its $120 billion a month in asset purchases - are expected by some to increase inflation and therefore lower the value of the dollar.

“The dollar suffered the latest in a string of second-quarter setbacks after April’s jobs report Friday showed a sharp slowdown in hiring and a surprise uptick in unemployment. The data supported the Fed’s low interest rate stance and bolstered conviction in the central bank tapering stimulus later rather than sooner,” wrote Joe Manimbo, senior market analyst at Western Union Business Solutions.

The British pound was the biggest gainer among the G10 currencies, rallying 1.19% on Monday to $1.415, 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.

The Australian dollar was another beneficiary of the weaker dollar. A surge in commodity prices also supported the Antipodean currency. The Aussie dollar was also at its highest since Feb. 25 and was last trading 0.38% higher at $0.788.

The euro was last 0.06% higher at $1.217, having earlier touched its highest since Feb. 26 at $1.218.