The dollar was on the defensive early on Monday, nursing deep losses against the euro and yen after Friday's firm U.S. jobs report failed to shift a broadly held view that the Federal Reserve will remain cautious on raising interest rates this year.
The euro was little changed at $1.1393 EUR=, hovering near a 5-1/2-month high of $1.1438 struck on Friday. The dollar brushed 111.56 on Monday, its lowest March 22, after sliding 0.8 percent versus the Japanese currency.
Nonfarm payrolls increased by 215,000 last month, the Labor Department said, beating economists' expectations for 205,000 according to a Reuters poll. Average hourly earnings increased 7 cents, while the unemployment rate rose to 5.0 percent from an eight-year low of 4.9 percent.
Fed funds futures rose across the board after Friday's jobs report, implying a greater chance the central bank will raise interest rates at least once more this year.
Futures are now pricing the first better-than-average chance of a rate hike in September, according to CME Group data. It had been December prior to the report.
Still, traders only saw a 1-in-5 chance that the Fed would raise rates twice this year, as they forecast at their most recent meeting.
A strengthening economy will allow for more tightening of monetary policy as the year goes on, Cleveland Fed President Loretta Mester said Friday.
Even as other prominent Fed officials, including Chair Janet Yellen, recently have issued more cautionary tones, Mester said during a speech in New York that the economy is growing enough for the central bank to continue down the path of normalization.
"The policy path I foresee as appropriate today is slightly more gradual than the path I foresaw in December, partly because of the slight downward revision to my growth forecast but mainly because I now estimate a lower longer-run equilibrium interest rate. But these are small changes," she told the New York Association for Business Economics, according to prepared remarks. "The important point is that the economy has shown considerable resiliency, and in my view, the outlook and risks around the outlook will likely support gradual reductions in the degree of accommodation this year."
Oil prices slipped in early trading on Monday as the chances fell of Middle East producers agreeing to restrain overproduction, while U.S. output has remained stubbornly high despite spiraling debt levels and bankruptcies.
Front month U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading at $36.23 per barrel at 0014 GMT, down over half a dollar from their last settlement.
International Brent futures LCOc1 were down 45 cents at $38.22 a barrel.
The falls extended a 4 percent tumble on Friday when Saudi Arabia said it would only participate in a global freeze of its output if its rival Iran also took part, something Tehran has so far dismissed.
Adding to concerns of a global glut which has pulled down prices by as much as 70 percent since 2014, U.S. production has remained stubbornly high despite steep cuts in drilling for new reserves as well as a jump in bankruptcies.
Saudi Arabia revealed on Friday the formation of two trillion U.S. dollars sovereign fund for the post-oil production phase, Sabq online newspaper reported.
Reference: CNBC, Reuters, Xinhua
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