FOREX-Dollar holds gains post-jobs data; Fed, BOJ eyed

SYDNEY (March 12): The dollar hovered around three-week highs against a basket of major currencies in Asia on Monday, having gained ground late last week after upbeat U.S. jobs data was seen lessening the chance of fresh stimulus from the Federal Reserve this week.

The euro, however, struggled after suffering what traders described as a buy-the-rumour-sell-the-fact fall on Greece's bond swap deal with private creditors which will clear the way for a new bailout.

The single currency was last at $1.3114, with immediate support seen at last week's three-week low of $1.3095. A break there could see the euro fall back to $1.3054, the 50 percent retracement of the $1.2623-$1.3486 rally.

"Although the success of the Greek...deal is a positive development, we remain bearish on the euro's prospects in coming months," analysts at Barclays Capital wrote in a client note.

Key concerns include uncertainty about the actual settlement of Greek CDS, or default insurance contracts, how well Athens can implement fiscal austerity and the potential for problems to develop in other peripheral euro zone countries.

They also said monetary conditions in the euro area will remain very loose compared to the United States, where the Fed is unlikely to ease at its policy meeting on Tuesday given a more robust growth picture lately.

U.S. jobs data on Friday showed employers added more than 200,000 workers to their payrolls for a third straight month in February, a sign the economy was strengthening.

"That is certainly supportive for the dollar," said Greg Gibbs, strategist at RBS in Sydney.

Currency speculators in the week ended March 6 increased bets in favour of the U.S. dollar, data from the Commodity Futures Trading Commission showed on Friday.

The dollar index was last at 79.992, having risen as high as 80.061 on Friday, its best level since mid-February.

The greenback also shot higher against the yen as U.S. Treasury yields rose on the back of the upbeat jobs data, making it more attractive against the low-yielding Japanese currency.

The dollar reached an 11-month high of 82.64 yen on Friday, before steadying at 82.45. On the charts, the dollar still has bullish momentum, with 84.00 now in view after it broke 81.85 and it closed last week above its 100-week moving average of 82.10, traders said.

The firmer U.S. dollar also helped a retreat in commodity currencies like the Australian dollar. The Aussie last stood at $1.0569, down about a full U.S. cent from Friday's peak of $1.0665.

Markets appeared to have shrugged off Saturday's data showing China posted its biggest trade deficit in at least a decade in February.

Analysts have cautioned against reading too much into the numbers given the underlying volatility caused by the Chinese Lunar New Year holiday that saw a week-long factory shut down in January 2012 and February last year.

Japan's machinery orders for January are due at 2350 GMT. The Bank of Japan starts a two-day policy meeting on Monday. - Reuters

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