FOREX-Dollar rebounds, lifted by robust U.S. payrolls

* Strong jobs data boost dollar, stave off selling

* Euro falls broadly as peripheral bond spreads widen

* Concerns over Ireland’s fiscal position escalate
(Recasts, adds U.S. data, quote, changes byline, dateline;
previous LONDON)

By Gertrude Chavez-Dreyfuss

NEW YORK, Nov 5 (BestGrowthStock) – The dollar rallied on Friday
after an unexpectedly strong U.S. nonfarm payrolls report
suggested the economy may well be on a stable road to
recovery.

The U.S. data came two days after the Federal Reserve
committed to inject $600 billion to boost a flagging economy
and gave the greenback temporary relief from a broad sell-off.

Some investors, however, remained unconvinced that the
employment numbers were sufficient to turn the dollar’s
fortunes around.

Data on Friday showed that the U.S. economy added 151,000
jobs in October, blowing out expectations for a 60,000 rise and
the fastest pace of hiring since April 2010. For more see
[ID:nN04265378].

“I don’t want to draw over-hasty conclusions because I
think it all depends on how sustainable these gains are,” said
Fabian Eliasson, vice president of currency sales at Mizuho
Corporate Bank in New York.

“I want to see several months of these kind of numbers …
but the dollar is strengthening nicely and we could see a
little bit of a reversal from recent dollar selling heading
into the weekend.”

In early trading the euro fell (Read more about the trembling euro. ) to session lows at $1.4032
(EUR=EBS: ), according to EBS data. It last traded down 0.8
percent at $1.4078, retreating from a 9-1/2-month high of
$1.4283 reached the previous day.

Market participants had been selling the euro anyway as
concerns over Ireland’s austerity budget prompted a widening in
peripheral euro zone bond spreads. The premium investors demand
to hold 10-year Irish government bonds rather than German
benchmarks rose to a euro lifetime high after Dublin proposed a
budget some traders said was ‘unrealistic’. [ID:nLDE6A40HF]

Ireland is planning to push through spending cuts and tax
hikes worth six billion euros next year, the toughest budget in
its history, in a last-ditch effort to convince investors it is
not on the verge of a financial meltdown. [ID:nLDE6A3168]

Traders said stop-losses in the euro were hit all the way
down while a surprise drop in German manufacturing orders also
dented euro sentiment. [ID:nLDE6A40WR]

Some strategists believe, however, that even with sovereign
debt concerns in the euro zone and a strong U.S. payrolls
report, the euro’s support levels against the dollar would not
be challenged.

“The risk trade looks like it is being partially expressed
through short euro/Australian dollar,” said Alan Ruskin, global
head of currency strategy at Deutsche Bank.

“The data response is the clearest sign yet that traders
are looking to use the euro as well as the dollar as a funder
for risk trades.”

The dollar rose 0.5 percent against the yen to 81.13
(JPY=EBS: ), not far from session highs at 81.48. Traders cited
talk of huge stop-loss buy orders above 82.00. On previous runs
to that level, the currency pair had faced heavy selling from
Japanese corporates and U.S. institutional funds.

The Bank of Japan earlier concluded a policy review without
easing further. The yen firmed slightly after the announcement
on disappointment that the bank had not unveiled any expansion
of its asset buying plan in response to that of the Fed.

The dollar was up around 0.7 percent versus a currency
basket (.DXY: ) at 76.404, bouncing from an 11-month low touched
on Thursday of 75.631.
(Additional reporting by Steven C. Johnson; Editing by James
Dalgleish)

FOREX-Dollar rebounds, lifted by robust U.S. payrolls