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Dismal US jobs figures drag greenback to fresh low

The dollar sank to a new low on the euro on Friday on dismal US jobs data but later clawed back losses after the US Federal Reserve said it would pump more liquidity into the cash-strapped banking system.

The euro rose at one point on Friday to a new peak of US$1.5464 since its creation in 1999.

Around 10pm GMT, the euro was at US$1.5359, down slightly from US$1.5381 late on Thursday in New York.

The dollar was at ¥102.67, virtually unchanged from ¥102.64 on Thursday. Earlier the greenback had fallen to ¥101.82, its lowest level since January 2005.

The beleaguered greenback came under heavy selling pressure on news that a faltering US economy lost 63,000 jobs last month.

The US Labor Department report showed the second straight month of losses in nonfarm payrolls, seen as one of the best indicators of economic momentum.

Last month's loss was the biggest since March 2003, at the start of the war in Iraq, and a major disappointment for analysts who were expecting a gain of 25,000 jobs. For some, the report confirms the US is in recession.

"For two months in a row, the US economy lost jobs. This is bad, but not as bad as will get in the coming months," said Kathy Lien, an analyst at Forex Capital Markets.

The weakness in the labor market will lead the Fed to slash its federal funds rate, currently at 3 percent, at its meeting on March 18, she said: "They will have no choice but to cut interest rates by 75 basis points."

CIBC World Markets senior economist Avery Shenfeld said: "The payrolls report had recession written all over it. It's nearly unheard of to see these numbers outside of recession."

The dollar was lifted slightly by news the Fed was pumping up to US$200 billion in short-term funding into the distressed financial system.

In late New York trading on Friday, the US dollar was at 1.0247 Swiss francs, up from SF1.0224 late on Thursday.

The pound firmed to US$2.0153 from US$2.0099.
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