* Euro gains as Italian referendum as expected
* Dollar strength seen overextended
(Adds market action, changes dateline, previous LONDON)
By Karen Brettell
NEW YORK, Dec 5 The euro recovered from earlier
weakness against the U.S dollar on Monday after Italian Prime
Minister Matteo Renzi's loss in a referendum over constitutional
reform was seen by traders as largely expected and recent euro
weakness was seen as having run too far.
Renzi is set to resign on Monday after the decision. The
size of the "No" vote, at 59.1 percent, was more emphatic than
had been forecast.
Renzi's resignation could open the door to an early election
next year and the possibility of the anti-euro 5-Star Movement
gaining power, though many investors and analysts see it as more
likely that a caretaker government will be put in place until an
election in 2018.
"There's not a large political implication for the euro and
the euro is also very overextended," said Mark McCormick, North
American head of foreign exchange strategy at TD Securities in
The single currency tumbled as much as 1.4 percent in
Asian trade to hit $1.0719, its weakest since March 2015, before
recovering to $1.0709, up 0.43 percent on the day.
The greenback also weakened to 2-1/2 week lows against a
basket of currencies on Monday as investors viewed recent dollar
strength as overdone.
A solid but unexceptional U.S. jobs report for November on
Friday failed to add additional fuel to the dollar rally sparked
by Donald Trump's surprise presidential election victory on Nov.
U.S. nonfarm payrolls increased by 178,000 jobs last month
after increasing by 142,000 in October, the Labor Department
said on Friday. However, wages slipped for the first time in
nearly a year.
"The details in the nonfarm payrolls number were not that
great," McCormick said. "The dollar has overshot the rates
story, and market positioning has moved kind of quickly, and so
there is some scope for it to pull back over the next couple of
The dollar index, which measures the greenback
against a basket if six major currencies, slipped 0.31 percent
to 100.47, the lowest since Nov. 17. The index reached an almost
15-year high of 102.05 on Nov. 24.
(Reporting by Karen Brettell; Editing by Will Dunham)