FOREX-Dollar rises broadly, tops 110 yen as risk appetite rebounds

* Dollar rises above 110 yen for the first time since Dec.31

* Sterling falls as PM May tries to end Brexit impasse (Updates market action)

By Saqib Iqbal Ahmed

NEW YORK, Feb 4 (Reuters) - The U.S. dollar strengthenedacross the board on Monday, as investors took heart fromFriday's strong payrolls number and improved risk appetitehelped lift the greenback to a five-week high against thesafe-haven yen.

The euro weakened as investors fretted over economic risksto the euro zone economy, while concerns about Britain's plan toleave the European Union dragged the pound lower.

The dollar index .DXY , which tracks the greenback versusthe euro, yen, British pound and three other currencies, was up0.28 percent at 95.843.

"The dollar is winning the reverse beauty contest," saidKarl Schamotta, chief market strategist at Cambridge GlobalPayments in Toronto.

"It's supported in a declining yield landscape bybetter-than-expected non-farm payroll and you are seeing alittle bit of that risk appetite returning," he said.

A U.S. Labor Department report on Friday showed non-farmpayrolls jumped by 304,000 jobs last month, exceeding forecastsand the largest gain since February 2018. ISM manufacturingactivity numbers for January were also better than expected,pointing to underlying strength in the world's biggest economy.

"Last Friday's strong payroll number is helping to supportthe dollar bulls' course of action as U.S. growth remains quitestrong," Dean Popplewell, chief currency strategist at Oandasaid in a note.

Dollar sentiment has undergone a U-turn in recent days withweak European data and expanding stimulus in China boostingdemand for the greenback, despite indications from the U.S.Federal Reserve that interest rate increases may be over fornow.

With much of Asia closed by holidays this week, the dollaralso took heart from recently concluded trade talks betweenChina and the United States.

Against the Japanese yen, which tends to benefit duringgeopolitical or financial stress as Japan is the world's biggestcreditor nation, the dollar briefly rose above 110 yen, for thefirst time since Dec. 31.

"It does suggest that we were seeing a sort of a false dawnin the Japanese economy, that growth expectations may havegotten ratcheted a little too high especially relative to whatwe are seeing in the United States," said Schamotta.

Sterling rose after a newspaper report said that goodsshipped to Britain from the European Union could be wavedthrough without checks in the event of a "no-deal" Brexit,before giving up all those gains to trade 0.34 percent loweragainst the dollar. Worries among investors about a disorderly'no-deal' Brexit remains the top driver for the Britishcurrency.

The Canadian dollar CAD= weakened against its U.S.counterpart, reversing some of last week's rally, as oil pricesfell and the greenback broadly climbed.

saqib.ahmed@thomsonreuters.com saqib.ahmed.thomsonreuters.com@reuters.net

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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