The US dollar broadly strengthened on Friday after the US government reported fewer job losses than expected last month and the US Federal Reserve boosted liquidity to tackle a credit crisis.
At 9pm GMT, the euro traded at US$1.5422, down from US$1.5462 late on Thursday. Earlier it had slid to US$1.5360, its lowest level since March 24. The greenback surged to ¥105.39 from ¥104.53.
The dollar gained after the Labor Department said US employers cut 20,000 nonfarm jobs last month, far fewer than private economists’ forecasts of 75,000.
The jobless rate fell a tenth of a percentage point to 5 percent, the department said, instead of the expected rise to 5.2 percent.
While still a weak number, it reinforced the view that the US economy is stabilizing and that the Fed may therefore take a pause in its rate-cutting campaign.
“The first positive surprise from nonfarm payrolls this year helps cap a big week for both the US stock market and the dollar on an improved outlook for the US economy,” Bank of New York Mellon senior currency strategist Michael Woolfolk said.
Considering first-quarter US GDP growth came in this week at 0.6 percent, after 0.6 percent in the fourth quarter, Woolfolk said that the data may suggest that the world’s largest economy may narrowly avoid a technical recession, defined as two consecutive quarters of contraction.
“Sentiment and technicals have been pointing to further gains for the US dollar and weakness in the euro and now with nonfarm payrolls, fundamentals support that view as well,” Kathy Lien at Forex Capital Markets said.
The dollar was also supported by the Fed’s increase in the amount of monthly lending available to banks by US$50 billion to US$150 billion under the so-called Term Auction Facility, starting tomorrow.
In addition, the US central bank expanded the scope of collateral it will accept in exchange for credit, and increased its swap agreements with the European Central Bank and Swiss National Bank to boost dollar liquidity.
In late New York trading, the dollar was at 1.0570 Swiss francs, up from SF1.0492 late on Thursday.
The pound was at US$1.9716, down from US$1.9744.