Dollar sags after downbeat US data, sterling near one-month low

By Shinichi Saoshiro

TOKYO (Reuters) - The dollar sagged against its peers early on Wednesday after downbeat data sapped some of the momentum it had gained from last week's robust U.S. jobs report.

The greenback, however, was on the front foot against the pound, which hovered near a 1-month low struck overnight, after a Bank of England policymaker suggested more monetary easing was needed although the BoE cut rates last week.

The dollar was steady at 101.935 yen , having gone as high as 102.660 on Monday in the wake of last week's stronger-than-expected U.S. jobs report.

The euro was little changed at $1.1115 after gaining 0.3 percent overnight. The dollar index was down 0.2 percent at a 5-day low of 95.981 .

"The weaker-than-expected U.S. productivity data weighed on the dollar broadly. The market usually does not give the data much heed, but it drew attention as it marked the third straight quarter of decline," said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.

The U.S. Labor Department said on Tuesday that productivity, which measures hourly output per worker, dropped at a 0.5 percent annual rate in the April-June period, extending the longest decline since 1979.

Sterling was effectively flat at $1.3014 , within close reach of $1.2956, its lowest level since July 11 hit on Tuesday. The pound took a knock after BOE policymaker Ian McCafferty said more monetary easing was likely to be required if the UK's economic decline worsens.

The Australian dollar treaded water at $0.7640 , near the 3-month peak of $0.7687 reached on Tuesday. Australia's relatively high yields and investor appetite for risk has buoyed the Aussie this week.

(Reporting by Shinichi Saoshiro; Editing by Eric Meijer)