Dollar edges lower after big surge on U.S. jobs report

By Dion Rabouin

NEW YORK (Reuters) - The dollar edged downward on Monday after touching a 6-1/2-month high following last week's stronger-than-expected monthly U.S. jobs report.

"It's more of a positioning-driven move than anything fundamental," said Ian Gordon, FX strategist at Bank of America Merrill Lynch, of the dollar's Monday losses.

"You had a pretty strong increase in positioning, dollar-long-positioning, over the past couple of weeks and then that kind of followed through after the (jobs) report. And now that has kind of stalled and people are taking profit."

As of Nov. 3, the latest date for which data is available, speculators in futures markets had a short position of about 134,000 contracts in the euro, biggest since June, according to Commodity Futures Trading Commission figures. Short positions in the yen also grew.

The dollar index <.DXY>, which measures the greenback against a basket of major currencies, fell 0.2 percent on Monday to 98.962.

The dollar index hit a high of 99.345 on Friday after the release of the government's U.S. non-farm payrolls report showed 271,000 jobs created in October, far exceeding the 180,000 economists polled by Reuters had predicted.

A Reuters report early Monday that the European Central Bank is forming a consensus to cut its deposit interest rate further into negative territory in December helped push the dollar higher against the euro in early trading.

But those gains were short-lived. The euro shed its earlier declines and gained modestly, rising 0.2 percent to $1.0759.

The Japanese yen had traded lower against the dollar until mid-morning in New York, but has since risen slightly, trading 0.06 percent higher after earlier pushing the dollar to fresh session lows below 123 yen.

Dollar losses extended to other major currencies as well with the greenback losing ground to the British pound , Swiss franc , Swedish crown , New Zealand dollar and Canadian dollar .

Monday's reversal of fortune for the dollar came after it soared in trading Friday following the release of the surprisingly robust payrolls report.

The report helped solidify a case for the Federal Reserve to increase U.S. overnight borrowing costs for the first time since 2006, a move that would strengthen the greenback and attract investors to higher U.S. yields.

Following the report, 15 of 17 primary dealers - the banks that deal with the Fed directly - said they expect it to raise rates at its next meeting in December, according to a Reuters poll.

(Editing by G Crosse)

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