Sun, Nov 05, 2006 - Page 10 News List

US jobs report suspends bout of dollar selling


The US dollar jumped on currency markets on Friday on news of a fall in the US unemployment rate and the upward revision of job creation figures for August and September.

The euro bought US$1.2717 around 10pm GMT, down from US$1.2776 late Thursday in New York. The dollar was worth ?117.99, against ?117.11 on Thursday.

The US Labor Department said the unemployment rate fell to 4.4 percent of the working population -- the lowest level since May 2001 -- from 4.6 percent in September.

The agency also revised up its estimate of job creation in the prior two months. It said 148,000 jobs were added in September, nearly triple a first estimate of 51,000, and 230,000 in August, instead of 188,000.

But only 92,000 jobs were created last month, well short of market predictions of 125,000.

"Today's non-farm payrolls temporarily suspended the bout of dollar selling seen this week amidst soft US data and hawkish comments from the European Central Bank," said Michael Woolfolk, currency strategist at Bank of New York.

The improvement on the jobs front, coupled with a 0.4 percent rise in average hourly wages, diminished expectations that the US Federal Reserve will cut borrowing costs any time soon.

The Fed kept its key interest rate unchanged at 5.25 percent for the third straight month last month, following 17 consecutive quarter-point increases.

"The underlying strength in current labor market conditions suggests that our call for an easing of monetary policy by 50 basis points in the first quarter of 2007 is too aggressive," Calyon analyst Michael Carey said.

Meanwhile, the pound gave up earlier gains made on a strong services survey in Britain. The purchasing managers' index rose to a six-month high of 59.3 last month from 57.0 in September, beating predictions of a dip to 56.7.

The numbers will give the Bank of England further reason to raise interest rates. The euro itself remains relatively well supported after European Central Bank President Jean-Claude Trichet gave firm hints on Thursday that eurozone interest rates would rise again next month.

The pound bought US$1.9007 around 10pm GMT, from US$1.9084 late on Thursday. The greenback advanced to 1.2535 Swiss francs, from SF1.2450.

The US currency dropped against the New Taiwan dollar on the Taipei Foreign Exchange on Friday, losing NT$0.125 to close at NT$32.920.

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