SINGAPORE, Oct 8 The dollar resumed its downtrend on Monday after a solid US jobs report

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SINGAPORE, Oct 8 (Reuters) The dollar resumed its downtrend on Monday after a solid US jobs report failed to dampen significantly expectations for another cut in US interest rates, but the euro struggled for upside momentum.

The dollar rose sharply and US stocks gained after data on Friday showed September US jobs growth of 110,000, the highest since May.

August's jobs fall was reversed to a gain and July's numbers were revised up.[ID:nN04361922].

But the dollar was under selling pressure again on Monday as analysts concluded the U.S. jobs market was still weakening and the Fed Reserve could cut rates again before the end of the year.

Still, fears of a U.S. recession seemed to have receded and investors were piling back into riskier assets and high-yielding currencies.

The Australian dollar hit a 23-year high of $0.9023 early on Monday, while the Japanese yen, which is often used to fund carry trades, was under selling pressure.

The dollar index, a gauge of the currency's value against a basket of major currencies, was at 78.35, above last week's record low of 77.66 but below 78.819, a high hit after the jobs data.

''The market cooled off a bit after the non-farm payrolls on their Fed easing expectations,'' said Markus Ammann, director of global foreign exchange at Bayerische Hypo Und Vereinsbank.

''But we think the Aussie continues to tank higher, pressuring the U.S. dollar and I also got the feeling that we still have lots of buy on dips waiting for dollar/yen.'' Trading volumes in Asia were thinned by a holiday in Japan, but traders expected the dollar to be volatile, even though markets in Canada and the United States are also closed on Monday.

More importantly, traders expected the euro to be listless ahead of a meeting of euro zone finance ministers in Luxembourg later in the day, especially after the jawboning by European politicians.

The euro has had trouble rising since it came off record highs of $1.4281 at the start of the month as euro zone officials complained about bearing the brunt of the dollar's decline ahead of a meeting of finance ministers and central bankers from the Group of Seven rich nations on Oct.20-21.

The euro was changing hands at $1.4130 on Monday, barely changed from late Friday.

''To date the Eurogroup has been a bit like your local amateur operatic society: a couple of good strong voices, but the chorus is all over the shop,'' said Westpac Bank strategist Robert Rennie.

The euro's direction now depended mainly on how loud and clear the message from the finance ministers was, Rennie said.

''If we do find a single strong message, that message is likely to put a clear top in euro and euro/yen.

''If we do not, and Europe sound less than strongly concerned, the dollar will continue to suffer,'' Rennie said.

Since mid-August when a crisis in the US subprime mortgage market practically froze bank lending, the dollar has been trending down.

The sell-off accelerated after the Fed slashed the fed funds rate by a half percentage point to 4.75 percent last month.

While the jobs report reduced the chances of a cut in the Fed's benchmark federal funds rate this month, it did not eradicate them.

The futures market reflected a 50 per cent perceived chance of a cut in the benchmark rate, down from a roughly 70 per cent implied chance prior to the payrolls report.

REUTERS TB AS0749

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