US unemployment figures give euro yet another boost

The euro surged against the US dollar here Friday on disappointing employment data from the US that raised questions about the strength of an economic recovery there.

The single Eurpean currency in late-day deals was at US$1.1070, up from US$1.0945 in New York late Thursday.

The dollar was trading at ¥116.94, against ¥116.74 on Friday.

Market sentiment is that greenback is likely to weaken further until there is a pick-up in the US labor market, analysts said.

Friday's report from the US Department of Labor showed that US non-farm payrolls slipped 93,000 in August, well below the consensus estimate of a 19,000 rise. The drop was the seventh in a row and the eighth in the past nine months.

The jobless rate, which is tracked by a separate survey, dipped from 6.2 to 6.1 percent of the workforce.

"Markets are starting to question the sustainability of the US recovery," said Steve Pearson, head of currencies at HBOS Treasury Sertivces, adding that investors were seeking assurances the rebound was firmly entrenched.

Higher employment rates are necessary to underpin the consumer spending needed for sustainable recovery, according to other analysts.

Daiwa economist Mike Moran added that strong productivity growth had allowed firms to trim worker numbers while boosting output.

"Not only is labor demand weak, but it is showing little sign of improvement. The decline of 93,000 jobs in August was one of the larger losses in recent months, and cuts were widespread across industries," Moran said.

The euro was the biggest beneficiary of the weak US figures, rising well past the US$1.10 mark.

"But US$1.1050 is a fairly formidable resistance level," said Pearson.

Earlier, nervousness ahead of the data had already put pressure on the US currency.

The yen was stuck at just under 117 against the dollar with the threat of Japanese intervention keeping players sidelined.

Sterling also had a quiet day, gaining on the dollar but weakening against the euro.

The euro was changing hands at US$1.1070, after US$1.0945 from late on Thursday in New York, ¥129.44 (¥127.80), £0.6964 ($#163;0.6916) and 1.5372 Swiss francs (Sf1.5377).

The dollar was being quoted at ¥116.94 (¥116.74) and 1.3893 Swiss francs (Sf1.4049).

The pound was at US$1.5893 (US$1.5816), ¥185.85 (¥184.69) and 2.2083 Swiss francs (Sf2.2223).

On the London Bullion Market, the price of an ounce of gold stood at US$375.80 against US$370.75 on Thursday afternoon.