The dollar fell sharply on Friday, nearing an 11-week low versus the euro and hitting a three-week low versus the yen after the US Labor Department reported that nonfarm payrolls grew at a slower-than-expected pace last month.
In late New York trading, the euro was trading at US$1.2404, compared with US$1.2297 just before the jobs data and US$1.2289 late Thursday. The dollar was fetching ¥109.46 from ¥111.16 the previous day. The dollar traded at 1.2504 Swiss francs from SF1.2635, and the British pound was changing hands at US$1.7937 from US$1.7822 on Thursday.
The Labor Department reported that US employers added only 96,000 new jobs last month against forecasts of a gain of 145,000. The jobs report showed a relatively anemic pace of job growth following three months in which payrolls have grown far slower than their average earlier this year.
That encouraged dollar bears to sell heavily, though the US currency still remained within the confines of the ranges where it has traded for months. The euro would have to break through the US$1.2460 mark to establish fresh multi-month highs.
"It's a pretty weak number, we seem to be having some weakness in US data at a time of increased strength in other economies ... and that would certainly bode ill for the dollar against those other currencies," Frank said.
The data ultimately leaves the dollar with the same dilemma that it has faced for months: whether the economy is strengthening with employment growth merely lagging, or whether the factors that led to a "soft patch" that started last May -- high oil prices, slipping consumer spending and slowing inflation -- are taking hold of the economy.
That question has largely kept the dollar trading within broad ranges for several months, and Friday's payrolls report will likely do little to help the dollar break out of the range.
In other trading, the Hong Kong dollar surged versus its US counterpart on Friday, buoyed by renewed speculation that China is nearing a plan to revalue its currency as it faces more pressure from the Bush administration. In late New York trading, the US dollar was fetching HK$7.7815, compared with HK$7.7962 when trading opened. It was the lowest level for the US dollar versus the Hong Kong currency since late February.
The post-payrolls losses also took the Australian dollar to a six-month high, the New Zealand dollar to a seven-month peak and the Canadian dollar to levels unseen since 1993.
The greatest volatility was in dollar versus the yen, with economic data showing Japan's "slow-but-steady improvement in the face of higher oil prices," a BNP Paribas report said on Friday morning. The dollar dipped by almost one cent to ¥110.24 on the data, which showed August machinery orders at 5.4 percent.
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