NEW YORK: The dollar weakened further on Monday as it continues to feel the carry-over effects of a disappointing U.S. jobs report from Friday that throws into question the timing for U.S. interest rate increase.
Expectations the U.S. Federal Reserve will raise interest rates sometime later this year has fuelled the dollar's rally since mid-2014. Higher U.S. interest rates will put dollar-denominated assets at a yield advantage versus other currencies such as the euro and yen where interest rates are being kept low.
European markets remained closed on Monday for the Easter holiday, limiting trading volumes and contributing to the narrow ranges.
The euro held above the $1.10 mark, but one strategist sees dollar strength returning.
"Chalk up the euro's strength to low volumes. It has had stiff resistance at the $1.1050 level, which goes back to the beginning of March. You might have a few people positioning for that move higher in euro but nobody is pounding the table on that and I think it is a sell above $1.10," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York
"I don't think we break through that resistance," he said.
In mid-morning New York trade, the euro gained 0.50 percent to $1.10265 on the EBS trading platform.
The dollar traded modestly higher against the yen at 119.08 yen, a rise of 0.11 percent.
Friday's closely watched employment data showed U.S. non-farm payrolls rose by 126,000 in March, the smallest gain since December 2013 and well under the 245,000 economists had forecast. On the brighter side, average hourly earnings increased 0.3 percent.
"We still see the dollar trending higher in the longer term. The jobs data headline was certainly soft, but we have to consider that jobs had been roughly growing at a pace of 200,000 a month for a year. The rise in earnings was also a plus," said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.
The greenback fell 0.20 percent against the Canadian dollar at C$1.2456,, near the bottom of its C$1.24 to C$1.28 range that has been in place since the end of January. The pause in the buying of the U.S. dollar against the Canadian dollar is providing a good opportunity, says BMO's Anderson to pick up the greenback once again.
"At these levels dollar/CAD is a buy," he said.
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