Sun, Jun 04, 2006 - Page 10 News List

Greenback takes it on the chin over weak US jobs data

AFP AND CNA , NEW YORK AND TAIPEI

The US dollar took it on the chin Friday after a much-awaited report showed weaker-than-expected job creation in the US, suggesting the cooling of the world's largest economy has begun.

The euro rose to US$1.2919 at 9pm from US$1.2802 late on Thursday in New York.

The dollar fell to ¥111.67 from ¥112.57 on Thursday.

Data from the US Labor Department showed US employers created a modest 75,000 new jobs last month, well below expectations of 170,000 new jobs.

"The lackluster 75,000 increase in non-farm payrolls in May means that the debate over whether the Fed raises interest rates again is not over yet," said an analyst at Capital Economics, Paul Ashworth.

The weak data suggested the US economy was "fast losing the strong momentum it evidently had in the first quarter," he said, which might cause the Federal Reserve to put off raising interest rates again at its next meeting.

The dollar has recovered some ground this week after minutes of the Federal Reserve's meeting last month, released on Wednesday, raised expectations of a further interest rate hike after 16 consecutive rises since June 2004.

The minutes of the May 10 FOMC meeting showed that members were concerned about inflation risks when they voted to raise the federal funds rate another quarter-point, to 5 percent.

Traders were also looking ahead to a meeting of the European Central Bank next Thursday and US trade data due to be released on Friday.

In late New York trading, the US dollar stood at 1.2077 Swiss francs, from SF1.2216 on Thursday. The pound was being traded at US$1.8824, from US$1.8645 on Thursday.

The US dollar lost ground against the New Taiwan dollar in Taipei on Friday, decreasing NT$0.030 to close at NT$32.080.

A total of US$691 million changed hands.

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