The lack of follow-through selling provided some US currency relief and there is also some optimism that prompt Fed action will help support the economy
Following significantly weaker than expected data on Friday, the US currency dipped sharply to lows around 1.4820.
US employment growth for December was held to 18,000 after an upwardly-revised 115,000 in November while unemployment rose sharply to 5.0% from 4.7% as the number of people looking for jobs increased. There were monthly employment falls in the manufacturing, construction and retail sectors with the total payroll increase the lowest for four years.
The ISM index for the services sector was little changed at 53.9 for December with orders and employment indices rising over the month. The ISM data will provide some relief, but the employment data will continue to increase unease over economic trends and will maintain pressure for an aggressive series of interest rate cuts by the Federal Reserve.
The latest ECRI inflation index also dipped to a three-year low for December. Futures markets put the possibility of a 0.50% cut at the end of January at over 50% following the payroll data. The dollar will, therefore, remain vulnerable on yield grounds, although a substantial amount of easing has now been priced in.
The dollar strengthened back to near 1.4660 in Europe on Monday before consolidation near 1.4685.