FOREX-Euro at 3-wk high as dollar nurses losses after jobs data

                                
 * Dollar down post U.S. jobs report, China export data
                                
 * Stop-losses triggered in thin market, euro above $1.45
                                
 * Fed's Bullard says rates to stay low, job losses to slow
                                
 * Aussie rallies on Chinese and local data, gold
                                
 By Anirban Nag and Vidya Ranganathan
                                
 SYDNEY/SINGAPORE, Jan 11 (Reuters) - The U.S. dollar
dropped on Monday, suffering its biggest fall in six weeks in
the wake of disappointing U.S. jobs data, while the Australian
dollar soared on the back of strong export numbers from China.
                                
 The euro <EUR=> charged as high as $1.4533, from $1.4414
late in New York on Friday, with stop losses triggered around
$1.4480.
                                
 It pierced the $1.4500 barrier after St. Louis Federal
Reserve President James Bullard said U.S. interest rates may
remain low for some time [ID:nN10135532].
                                
 The next big resistance is now seen around $1.4570 and a
break of that would suggest a gradual recovery towards $1.4800,
traders say.
                                
 "Expectations that the Federal Reserve will keep rates on
hold for the foreseeable future, encouraged by Friday's weak
employment report have held the dollar down," said Joseph
Capurso, a strategist at Commonwealth Bank.
                                
 The dollar index <.DXY> was down 0.69 percent at 76.93,
having risen to as high as 78.187 on Friday.
                                
 Latest data from the Commodity Futures Trading Commission
showed speculators cut U.S. dollar long positions in the week
to Jan 5, and traders say hat trend is likely to pick up.
[IMM/FX].     Trading was thin with Tokyo shut for a holiday,
encouraging some players to trigger stop-loss selling of the
U.S. currency.
                                
 Traders expect the greenback to stay on the defensive as
speculators cut long positions in the U.S. dollar following the
U.S. jobs report.
                                
 Data on Friday showed U.S. employers cut 85,000 jobs last
month. November payrolls, however, were revised to show the
economy actually added 4,000 jobs. [ID:nN0747110].
                                
 Interest rate futures <0#FF:> pared expectations the Fed
will raise benchmark short-term rates any time soon. July
futures contract <FFNO> implied a 22 percent chance of a rate
hike by mid-2010, down from around 40 percent before the jobs
data.
                                
  "The dollar's reaction soon after the soft employment data
would suggest that traditional economic relationships i.e. soft
data, weaker currency and vice versa, are starting to become a
dominant theme again at the cost of last year's risk on/risk
off theme," RBC Capital Markets said in a note to clients.
                                
 "This could partially explain the whippy trading on Friday.
                                
 "Over the medium-term, however, the risk on/risk off theme
is expected to continue to fade with FX focus returning more to
economic releases and the implication for monetary policy
rather than blindly following global risk sentiment."
                                
 EARNINGS THE NEXT LITMUS TEST
                                
 The U.S. dollar's next litmus test is expected to be the
U.S. earnings season which kicks off in earnest this week, U.S.
retail sales, industrial production and inflation data.
[ID:nN10128337]
                                
 "The new year is beginning with a gradual unwind of
December's dollar rally, as the notion of early Fed tightening
is put to rest," JPMorgan said in a report. "Ahead of earnings
season, add to U.S. dollar shorts versus commodity currencies
and also buy yen crosses."
                                
 Still, traders suspected the euro will have difficulty
rising past the $1.4570 resistance, given the jobs situation in
the euro zone is no better than in the United States -- it was
at an 11-year high in November.
                                
 The European Central Bank will meet on Thursday and is
expected to keep rates unchanged.
                                
 Jitters about more sovereign debt downgrades could keep a
leash on the euro. The Financial Times reported on Monday that
Portugal has been warned about a threat to its ratings.
[ID:nLDE6090O4].
                                
 That is likely to compound worries already caused by
Greece's credit battle and Iceland's row with the Netherlands
and Britain over its banking collapse.
                                
 The Australian dollar rallied to a 26-month high versus the
euro <AUDEUR=R>, rising to as high as 0.6442 euros. The Aussie
also struck a new five-week high of $0.9318 buoyed by strong
Chinese export numbers [ID:nTOE60900L].
                                
 The Aussie was also bolstered by a rise in gold prices.
Spot gold <XAU=> rose to a five-week high early on Monday.
                                
 Against the yen, the Aussie hit a 15-month high above 86
yen <AUDJPY=R>, with sell orders at around 86.10 yen levels,
traders said.
                                
 The yen <JPY=> was, however, firmer on the dollar, rising
to 92.15, from 92.68 yen late in New York on Friday.
                                
 On Friday, the yen recovered some ground after Japan's new
finance minister backed off from his earlier call for a weaker
yen following a rebuke from the prime minister.
 (Editing by Jan Dahinten)