LONDON--The dollar is lower in Europe Monday, still hurt by the disappointing U.S. payrolls data that came out Friday, while the euro benefits from improved global sentiment.
Chinese trade data showing a strong rise in exports last month and the start of the fourth-quarter U.S. earnings season are both helping to underpin sentiment.
As a result, the euro has risen back over $1.45 for the first time in about three weeks despite a warning that Portugal could now face a debt downgrade.
Hopes of an early rise in U.S. interest rates were largely dashed by the report showing that nonfarm payrolls fell by a hefty 85,000 in December rather than just the 10,000 that had been expected.
The market's rate expectations were further adjusted when St. Louis Federal Reserve President James Bullard made it clear that the data wouldn't affect existing policies and that rates were expected to remain low for some time to come.
Nevertheless, the market appeared keen to stay on the bright side and focused early Monday on data out of China showing that while the country's imports had risen 56% over the last year, its exports were up 18%.
Apart from indicating strong domestic expansion, the data also signal increased global demand. This optimism was reflected in Asian stock markets. which rose despite the U.S. payrolls data. Japan was closed for a holiday, but the Shanghai Composite Index ended 0.5% higher.
Sentiment was also being helped by the start of the U.S. fourth-quarter earnings season later in the day, with Alcoa expected to be the first major U.S. company to report.
"Our equity strategists expect corporates to adjust guidance to reflect the improving macro outlook and we believe the results will help underpin the recovery," said Silvio Peruzzo, a strategist with The Royal Bank of Scotland Group PLC.
The improved risk appetite played to the benefit of the euro, which was able to shrug off a report that Portugal now faces a credit downgrade if its government doesn't take convincing measures to reduce its budget deficit.
The market remains concerned about the prospects for Greece. The Greek government is scheduled to submit its deficit reduction plans to the European Union around Jan. 20, but there is little sign of Athens taking any decisive action.
Apart from gains against the dollar, the euro was up against the Swiss franc after Swiss National Bank Chairman Philipp Hildebrand said the central bank "will continue to prevent any excessive appreciation of the Swiss franc against the euro." He said the bank doesn't have any exchange rate target but will monitor developments "very closely."
Mr. Hildebrand's warning came as the euro traded down close to 1.47 Swiss franc, a level that triggered massive intervention by the SNB in March last year. The bank is believed to be more tolerant of franc strength now than it was then, given the recent recovery in the Swiss economy. However, it remains unclear quite how far the bank would allow the euro to fall. The euro is now up at 1.4759 franc.
The dollar was down at ¥92.56 from ¥92.59 late Friday in New York, according to EBS.
The euro was up a little at $1.4503 from $1.4414 and at ¥134.26 from ¥133.48. The dollar was also down at 1.0178 Swiss franc from 1.0237 franc, while the pound rose sharply to $1.6145 from $1.6034.
