The US dollar fell for a fourth day against the yen after the US jobless rate rose in March and the US government said the economy lost jobs in February, fueling concern the pace of the economic rebound may be slower than projected.
"It's bad for the dollar," said Dustin Reid, a currency strategist at UBS Warburg LLC in Stamford, Connecticut. "People are focused on the unemployment rate and the fact February payrolls were revised significantly lower."
The dollar dropped to Japanese yen 131.64 per dollar on Friday from Japanese yen 132.33 on Thursday.
It traded at US$0.8794 per euro, compared with US$0.8785 on Thursday. The dollar fell 0.7 percent against the yen and 1 percent against the euro this week.
The dollar dropped after the government said the unemployment rate rose to 5.7 percent from 5.5 percent in February. Analysts had expected a rise to 5.6 percent. While the economy added 58,000 non-farm jobs last month, it lost 2,000 jobs in February. A month ago, the Labor Department reported a 66,000 gain for February.
"After the last few weeks of strong economic news, we're seeing a little backing-up in the data" indicating the pace of recovery will slacken in the second quarter, said Bill Sterling, chief investment officer for US$4.5 billion under management at Trilogy Advisors LLC. "It wouldn't be surprising to see some weakening in the dollar" this year, he said.
Sterling said that while Trilogy's global investment portfolio favors the US, he's hedged some of its dollar exposure against losses versus the European currency.
The outlook for the dollar will also rest on US companies' first-quarter earnings, and whether signs of an economic recovery in the US is helping profits, investors said.
"First-quarter profitability will be very important for [investment] flows into US stocks and bonds," said Harriet Richmond, who oversees US$60 billion in currencies at JP Morgan Investment Management in London. That will determine "how enthusiastic people are about holding US assets."
The dollar gained against European currencies yesterday, reversing earlier declines, after US President George W. Bush said Secretary of State Colin Powell will travel to the Middle East next week to seek a cease-fire between Israel and the Palestinians.
The decision to involve Powell means "the negative of the Middle East from a dollar perspective has been removed for the time being, but it could ultimately return," said Ian Gunner, head of foreign-exchange research at Mellon Bank in London.
Escalating violence between the two sides raised the threat of dragging the US into the conflict, denting the economy and consumer confidence, and raising the risk of terrorist reprisals.
Japan's yen rose against 10 other major currencies after an index of Japanese economic indicators held above the level that signals growth for the second month in February, the first back-to-back readings showing growth in 14 months. The world's second-biggest economy is in its third recession in a decade.
The index, which tracks job offers, machinery orders and other forward-looking indicators, climbed to 66.7 percent in February from 60 percent in January. A reading above 50 indicates the economy is set to expand in about six months.
In other trading, the dollar fell against its Canadian counterpart to C$1.5893 from C$1.5936. It was little changed at SF1.6653 from SF1.6651, and at US$1.4330 per British pound from US$1.4332.
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