SYDNEY The euro raced to a near six-week high against the dollar and scaled a fresh five-year peak on the yen on Monday as investors ploughed back into the common currency after an unexpectedly upbeat U.S. jobs report failed to impress dollar bulls.
The common currency rose as high as $1.3748 from $1.3701 late in New York on Friday, spurred by a wave of stop-loss buying after $1.3710 was breached in very thin early trade. It later recoiled to $1.3711.
Against the yen, the euro climbed to 141.54, reaching highs not see since October 2008.
The euro's rise came even after the closely watched U.S. payrolls report on Friday showed employers hired more workers than expected in November, driving the jobless rate to a five-year low of 7.0 percent.
The upbeat outcome kept alive the chance the Federal Reserve could start scaling back stimulus this month.
"The dollar's failure to rally versus the euro and other major counterparts ... suggests traders are waiting for more obvious signal on the Fed's next moves before bringing the greenback off significant lows," said David Rodriguez, currency strategist at DailyFX.
"In that vein we'll keep a close eye on rhetoric from the Fed's Lacker, Bullard, and Fisher due to speak on Monday and Tuesday."
The euro was further underpinned by a growing view that the European Central Bank (ECB) is in no hurry to provide additional stimulus.
At the December 5 policy meeting, the ECB chose not to follow through on November's surprise cut and said it has yet to come up with a detailed plan of which policy tools to use and when.
"All told, the ECB seems to be slipping back into its old ways, characterized by a reactive and unaggressive approach to monetary policy," analysts at Nomura wrote in a note to clients.
"In relation to the euro, this means that the upward trend in the euro TWI, which has been observed since April could be sustained for a bit longer," they said, referring to the euro's trade weighted index (TWI).
Strength in the euro saw the dollar index slide to a near six-week low.
The dollar also underperformed commodity currencies, with the Australian dollar climbing to $0.9145, pulling away from a three-month trough of $0.8989 plumbed Friday.
Further supporting the Aussie, data on Sunday showed China's exports handily beat forecasts in November, adding to recent evidence of a stabilisation in the world's second-largest economy. China's imports of Australian goods hit a record high.
Against the yen, the greenback managed to gain ground, edging up to 103.15 following Friday's 1.1 percent rally. Among the major currencies, the yen continues to be the underdog thanks to the Bank of Japan's ultra-loose monetary policy.
Revised data due later in the morning is expected to confirm that Japan's economy slowed slightly in the third quarter, cementing expectations the BOJ will continue its massive stimulus and may even add to it next year to help offset a tax rise.
China's inflation data will also be closely watched. Analysts polled by Reuters expect the annual inflation rate for November to be unchanged from October's eight-month high of 3.2 percent, holding below the central bank's 3.5 percent target for 2013.
(Editing by Richard Pullin)