FOREX-Dollar slips further after disappointing jobs data, sterling shines

* Dollar weakens further after weaker jobs data
* Euro undeterred by Jan flash PMI numbers
* Sterling sets its eyes on $1.40, near 3-yr high
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Tommy Wilkes
LONDON, Feb 19 (Reuters) - The U.S. dollar slipped further
on Friday and the euro rebounded after disappointing U.S. data
dented optimism for a speedy recovery from the COVID-19
pandemic, while sterling edged towards the $1.40 mark.
The U.S. currency had been rising as a jump in Treasury
yields on the back of the so-called reflation trade encouraged
investors back into the greenback.
But an unexpected increase in U.S. weekly jobless claims
soured the economic outlook and sent the dollar lower overnight.
On Friday it traded down 0.1% against a basket of
currencies, the dollar index now at 90.474 =USD .
The string of soft labour data is weighing on the dollar
even as other indicators have shown resilience, and as President
Joe Biden's pandemic relief efforts take shape, including a
proposed $1.9 trillion spending package.
The euro rose 0.2% to $1.2113 EUR=EBS . The single currency
showed little reaction to German and French flash purchasing
manager index data, which unsurprisingly showed a slowdown in
activity in January.
Despite the recent rise in U.S. yields, many analysts think
they won't climb too much higher, limiting the benefit for the
dollar.
ING analysts said that "the rise in rates will be
self-regulating, meaning the dollar need not correct too much
higher."
They see the greenback index trading down to the 90.10 to
91.05 range
Sterling has been the standout performer in 2021 and on
Friday rose to $1.3987, an almost three-year high amid Britain's
aggressive vaccination programme. Given the size of Britain's vital services sector, analysts
say the faster it can reopen the economy the better for the
currency.
The dollar bought 105.46 yen JPY=EBS , down 0.2% and a
continued retreat from the five-month high of 106.225 reached
Wednesday.
Many analysts expect the dollar to weaken over the course of
the year as it has traditionally done during times of global
economic recovery, though it might take some time to develop.
"It looks to me like there's some exhaustion in that
just-straight global reflation theme," leading the dollar to
trend largely sideways for now, said Daniel Been, head of FX at
ANZ in Sydney.

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