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Sun, Sep 07, 2008 - Page 10 News List

Greenback gains pared by weak US jobs report


The US dollar’s rally was slowed on Friday by worse-than-expected US unemployment figures but held modest gains as worries about the eurozone economy dominated sentiment.

At 9pm GMT, the euro was quoted at US$1.4260 compared with US$1.4321 in New York late on Thursday. Against the Japanese currency, the dollar was at ¥107.67 from ¥107.10 on Thursday.

The dollar managed to keep on track even after a US Labor Department report — considered one of the best indicators of economic momentum — showed US unemployment jumped to a five-year high of 6.1 percent as 84,000 jobs were slashed last month.

It marked the eighth consecutive month of shrinking non-farm payrolls, and was worse than expected by private economists.

“Today’s employment report signaled the death knell of hope that the US can avoid recession,” Scott Anderson at Wells Fargo Economics said.

But analysts said that while the US fears had largely been priced into the currency market, the weakness in other regions is more surprising.

“The dollar appears well positioned to benefit from the misfortunes of other major currencies going forward,” Samarjit Shankar at Bank of New York Mellon said. “In other words, even though the economic backdrop in the US is not exactly rosy, the eurozone and Japan appear to be in a relatively worse situation with deteriorating activity and sentiment indicators. China and India are beginning to show signs of growth moderation as well.”

The euro fell to below US$1.42, its lowest level since last October, after German industrial production figures for July that raised fears the biggest European economy was in recession.

The US currency has surged against the euro this week. The euro started off on Monday above US$1.47. Some analysts have begun suggesting the dollar’s rally might be short-lived.

“Price action would suggest upside momentum is beginning to fade a little,” said Callum Henderson, head of foreign exchange strategy with Standard Chartered Bank in Singapore.

The euro was hit by the poor economic data out of Germany. The nation’s industrial output slumped by 1.8 percent in July from June, more than three times the downturn analysts had expected, official figures showed on Friday.

In late New York trading, the dollar stood at 1.1186 Swiss francs from SF1.1087 on Thursday. The pound was at US$1.7653 from US$1.7681.

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