NEW YORK (Dow Jones)--The dollar got left behind Monday as positive economic data in China and the aftereffects of last week's disappointing U.S. payrolls report led investors to ditch the greenback for higher-yielding currencies.
Positive global economic data point to a continuing recovery, which is benefiting the euro and commodity-backed and emerging-market currencies, and persistent troubles in the U.S. labor market weigh on the dollar.
The lagging U.S. jobs report is "mostly perceived as a dollar issue and not as a broad risk event," especially when Chinese data reported overnight points to a strong recovery there, said Sebastien Galy, currency strategist at BNP Paribas in New York.
Monday morning in New York, the euro was at $1.4525 from $1.4414 late Friday, according to EBS via CQG. The dollar was at Y92.47 from Y92.59, while the euro was at Y134.33 from Y133.48. The U.K. pound was at $1.6158 from $1.6034. The dollar was at CHF1.0163 from CHF1.0237.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 76.976 from 77.459 late Friday.
Chinese trade data released overnight registered a strong rise in exports last month showing that while the country's imports had risen 56% over the last year, its exports were up 18%. The export figure beat expectations for a 5% rise and ended 13 months of contraction.
"To the degree to which China's exports can be used as a proxy for the health of global trade, this is indeed reason for celebration," said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto.
The rosy Chinese data contrast with last week's disappointing U.S. non-farm payrolls report, which showed payrolls dropped by 85,000 in December, eclipsing the drop of 10,000 economists had predicted.
The challenging labor market likely pushes further into the future an increase in key U.S. interest rates, which the Federal Reserve has set near zero to stimulate a sagging economy.
Ultra-low interest rates, which weigh on the dollar as investors use the greenback to fund bets in riskier assets, could be around for a while, according to an overnight speech in Shanghai by James Bullard, president of Federal Reserve Bank of St. Louis.
Bullard reiterated the Fed's long-standing view that rates may remain low "for quite some time" in the U.S., sending the euro above $1.45 for the first time in more than three weeks.
The Fed's ultra-low stance means the dollar's recent show of strength is likely coming to an end, analysts said, with investors abandoning the dollar for higher-yielding currencies.
"We view Friday's jobs report as significantly bearish for the [dollar] as it will likely prevent rate markets from moving to price an early tightening from the Fed," Credit Suisse analysts wrote in a note to clients.
The euro is now aiming toward $1.47, according to Citigroup technical analysts.
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."
Hildebrand's warning came as the euro traded down close to CHF1.47, 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.
Meanwhile, Japanese Finance Minister Naoto Kan and U.S. Treasury Secretary Timothy Geithner confirmed Monday an agreement by Group of Seven finance chiefs to ensure stability in the foreign exchange market.
Canadian Dollar
The Canadian dollar is higher Monday morning but is underperforming other currencies against the ailing U.S. dollar.
The U.S. dollar is trading at C$1.0290 from C$1.0312 late Friday. The U.S. dollar reached a low of C$1.0253, its lowest level since Oct. 15, in overnight trading, according to EBS via CQG.
"Although the [Canadian dollar] is a beneficiary of the broadly softer USD tone that has emerged from last Friday's data and this week's so-far pro-risk environment, [it] is, rather unusually, a bit of a laggard on the crosses this morning," said a report from TD Securities.
"The Bank of Canada's quarterly business outlook and loan officer surveys will be released at 10:30 a.m. EST (1400 GMT) Monday, followed by a scheduled speech by Bank of Canada Deputy Governor Timothy Lane to the Edmonton CFA Society on the topic "Canada's Housing Sector in Recession and Recovery." An adviser will present Lane's speech at 2:20 p.m. EST (1920 GMT). The text of the speech will be available at 2:05 p.m. EST (1905 GMT) on the bank's Web site.
(Don Curren in Toronto and David Roman in Singapore contributed to this article.)
-By Bradley Davis, Dow Jones Newswires; 212-416-2654;
