* US Feb payrolls rise, jobless rate lowest since Apr 2009
* Dollar falls to 4-month low; Swiss franc rallies
* Euro climbs above $1.40 on ECB rate rise view
(Updates prices, adds comment, detail)
By Wanfeng Zhou
NEW YORK, March 4 (Reuters) - The dollar eased to a
four-month low against major currencies on Friday and looked
set to extend losses after a solid U.S. February jobs report
did little to alter expectations for Federal Reserve monetary
policy.
The euro broke above the psychologically important $1.40
level and headed for its biggest weekly rise in six weeks. The
single currency is on course to make a run toward $1.4283 -- a
key resistance level touched last November -- after European
Central Bank President Jean-Claude Trichet hinted Thursday at
an April interest rate rise.
Nonfarm payrolls increased 192,000 in February, the U.S.
Labor Department said, topping forecasts of 185,000 jobs. The
unemployment rate dipped to 8.9 percent, the lowest since April
2009, compared with 9.0 percent in January. For details, see
[]
The U.S. jobs report "is overshadowed by Trichet's very
hawkish comments" on Thursday, said Paresh Upadhyaya, head of
Americas G10 FX Strategy at BofA Merrill Lynch Global Research
in New York.
"The focus in currency markets will remain on interest rate
differentials and that has been clearly on an upward trend in
favor of the euro," he said. "So the price action at least for
the next week or two should favor upside bias for the euro."
While the data sent a strong signal the labor market
recovery has become self-sustaining, analysts said the number
was still close to forecasts, disappointing investors who had
hoped for an even stronger report.
Federal Reserve officials, who next meet on March 15, will
likely welcome February's sturdy employment report, but
probably still regard the pace of job creation as too slow to
change the U.S. central bank's ultra-easy monetary policies.
"We are seeing some gradual improvement in the labor market
but not dramatic enough to change Fed policy," said Steven
Englander, head of G10 strategy at Citigroup in New York. "The
Fed will look at this data and see no reason to change
policy."
The dollar index, which measures the greenback against a
basket of major currencies, fell as low as 76.275 <.DXY>, the
lowest since Nov. 5.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
SNAP ANALYSIS: U.S. jobs data showing some consistency
[]
Reuters insider-Strong Payrolls Data Puts Focus on Fed's QE
http://link.reuters.com/mub48r
Graphic- US payrolls: http://r.reuters.com/rud48r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The euro <EUR=EBS> last traded at $1.3985, up 0.2 percent
on the day, after surging as high as $1.4009 on trading
platform EBS, the strongest level since early November.
The euro has moved sharply higher against the dollar in
recent weeks amid growing expectations the ECB will raise
interest rates before the U.S. central bank does.
ECB rate speculation has pushed yields on two-year German
government bonds <DE2YT=TWEB> -- the maturity most sensitive to
official rate moves -- roughly one full percentage point higher
than those of their U.S. counterparts <US2YT=RR> this week.
The spread between the two hit its widest since January
2009.
Gains in the euro could be limited, however, amid concerns
about debt problems in Spain, Portugal, Ireland and Greece. A
rise in rates would increase the cost of funding for these
highly-indebted economies.
Euro zone leaders will meet on March 11 to hammer out a
comprehensive package of measures against the bloc's debt
crisis, before signing off on any deal on March 24-25.
"The sovereign debt issue has been dormant but is is not
dead. it will likely move back to the forefront at the upcoming
summits this month," Englander said.
The dollar <JPY=EBS> slipped 0.1 percent to 82.32 yen,
retreating after earlier rising as high as 83.09 yen on EBS
immediately after the release of the payrolls report.
The safe-haven Swiss franc rose as violent clashes in Libya
intensified between rebel forces and loyalists to Muammar
Gaddafi, heightening worries that political instability in the
region could disrupt oil supplies. []
The dollar fell 0.6 percent to 0.9262 Swiss franc <CHF=EBS>,
while the euro lost 0.5 percent to 1.2947 francs <EURCHF=EBS>.
