FOREX-Dollar languishes at 10-week lows after weak jobs report

(New throughout, updates prices, market activity and comments)
By Kate Duguid and Saikat Chatterjee
NEW YORK, May 10 (Reuters) - The dollar held at 2-1/2 month
lows on Monday as a weak U.S. employment report spurred
investors to ditch the U.S. currency, pushing major rivals
including the British pound and Australian dollar higher.
The dollar index =USD , 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 U.S. 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.
Manimbo said that U.S. consumer price data on Wednesday and
retail sales Friday will share the spotlight this week.
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, the Labor
Department reported on Friday. "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.
The British pound GBP=D3 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.
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 weaker
dollar. A surge in commodity prices also supported the
Antipodean currency. The Aussie dollar AUD=D3 was also at its
highest since Feb. 25 and was last trading 0.38% higher at
$0.788.
The euro EUR=EBS was last 0.06% higher at $1.217, having
earlier touched its highest since Feb. 26 at $1.218.

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