By: Hillel Fuld
Directly following negative US jobs data and remarks from a Federal Reserve official claiming that US interest rates are going to stay low for an extended period of time, the dollar took a major dive.
On the flip side, bullish Chinese export data raised optimism about the state of the global economy, being lead by Asia. As a result of this optimism, risk appetite was also on the rise, which caused positive results for the Euro and commodity-linked currencies such as the australian Dollar.
Friday's data disappointed many with numbers showing that the US had cut 85,000 last month, despite November's payrolls, which showed 4,000 new jobs were added.
Monday brought the Dollar to continue its downward trend as St. Louis Federal Reserve Bank President James Bullard said rates would most likely remain low for quite some time, although he said Fed policy was unlikely to be pushed off course by December's jobs data.
"Expectations of the speed and scale of Fed tightening received a set-back from the weak payrolls numbers," said Chris Turner, head of currency strategy at ING in London.
"At the same time the global recovery story has received a shot in the arm with the quick rebound in Chinese exports. The Fed in no hurry to tighten, Asia is leading the global recovery so the dollar is weaker across the board".
The latest data from the Commodity Futures Trading Commission showed speculators cut U.S. dollar long positions -- bets the currency will appreciate -- in the week to Jan 5, and traders say that trend is likely to pick up.
The EUR rose 0.7 percent to $1.4517 after hitting a three week high of $1.4537. The next big resistance is seen around $1.4570 and a break of that would suggest a gradual recovery towards $1.4800, traders said.
The Australian dollar struck a new of $0.9319 five-week high versus the U.S. dollar brought on by an unexpected jump in Chinese export numbers and rallied to a 26-month 0.6442 high versus the euro.
The Aussie was also bolstered by a rise in gold prices. Spot gold XAU= rose to a five-week high early on Monday