Dollar finds support for data on US jobs; Australian dollar weaker

SINGAPORE (Reuters) – The dollar is kept close to a one – week high against the yen on Monday, backed by stronger data on US jobs and US factories, although the gains are probably limited by the prudence of the policy of the Federal Reserve trade holiday in Asia.

Data released on Friday showed that the US economy created 304,000 jobs in January, the highest level in 11 months, which is above estimates.

The greenback was slightly higher than the yen at 109.44, after posting its largest percentage gain in almost a month.

"The non-farm payroll was a high number and supports the dollar. A dovish Fed hit the dollar and the yen, but rising stocks and good US data drove the dollar's rebound against the yen, "said Nick Twidale, chief operating officer at Rakuten Securities.

The strong employment report also eased worries about the slowdown in the US economy, causing traders to reduce the Fed's expectations of lowering interest rates to support the economy later this year.

The benchmark 10-year US Treasury yield was 2.69%, rebounding after a four-week low of 2.619% set earlier last week. Rising yields in the US are the most likely to support the dollar in the near term.

In wider movements, foreign exchange markets maintained tight margins in early Asian trade, with the euro trading at US $ 1.1455.

Chinese financial markets are closed all week for lunar new year holidays. Other Asian markets are also closed part of the week, which limits the market activity.

The Australian dollar was down 0.2% to 0.7234 dollar, while the kiwi dollar was down slightly to 0.6895 dollar. The Australian dollar was hurt following the release of weaker than expected building permit data.

"Markets are now waiting for the next catalyst, which will likely be a new outcome of the ongoing US-China trade negotiations," added Mr. Twidale.

The dollar index, an indicator of its value against six major peers, remained stable at 95.60.

Despite the strength of the labor market, the US central bank is generally expected to keep rates unchanged this year due to growing worries about global growth, especially in China. Growth in the euro area was also weaker than expected with the slowdown in the main economic drivers of Europe, France and Germany.

The rise in US interest rates was the main driver of the outperformance of the greenback last year. However, most badysts do not see much of the dollar's rise this year, as US borrowing costs are expected to remain stable.

Elsewhere, the pound sterling was slightly lower at 1.3078 USD in early Asian trade. Traders expect the pound to remain volatile, with Brexit uncertainty still high. The Bank of England is expected to meet later this week and is expected to keep interest rates steady.