Dollar retreats after weak US jobs report
Sunday, 10 January 2010
NEW YORK, Jan 9 (AFP): The dollar skidded Friday as a weaker- than-expected US jobs report dented hopes for an improvement in the labor market and the wider economy.
The data showing a loss of 85,000 jobs in December dashed hopes for a return to positive job growth that could lead to a hike in US interest rates and support the greenback.
At 2200 GMT, the euro was quoted at 1.4404 dollars compared with 1.4318 in late New York trade Thursday.
The dollar fell to 92.72 yen from 93.25 yen as the weak US labor report offset the impact of further comments on the desirability of a weaker Japanese currency by the country's new finance minister, Naoto Kan.
In late New York trade, the dollar stood at 1.0234 Swiss francs from 1.0332 Thursday.
The pound was at 1.6020 dollars after 1.5932.
"This news has caused speculation of a rate hike to be put on ice, while speculation that the Federal Reserve may extend stimulus measures to spur the lagging economy has increased," said PNC Bank analyst Fred Rabb.
The report "reinforces a dour outlook for private-sector spending as households continue to face a weakening labor market paired with tightening credit conditions," added David Song at Forex Capital Management.
Although the dollar has in recent months gained on "risk aversion" in times of financial market turmoil, traders were focusing on the implications for interest rates, with the US Federal Reserve's main rate still near zero.
The unemployment rate held at 10 per cent, but also reflected a large number of people dropping out of the workforce.
"The unchanged unemployment rate of 10 per cent understates labor market slack, since labor force participation fell sharply," said Sophia Koropeckyj at Moody's Economy.com.
"Accordingly, the broader measure (of unemployment) increased to 17.3 per cent," she said.
In revising data for prior months, the data showed a net gain of 4,000 jobs in November instead of a loss of 11,000 previously reported, the first positive month after 22 months of losses.
The data showing a loss of 85,000 jobs in December dashed hopes for a return to positive job growth that could lead to a hike in US interest rates and support the greenback.
At 2200 GMT, the euro was quoted at 1.4404 dollars compared with 1.4318 in late New York trade Thursday.
The dollar fell to 92.72 yen from 93.25 yen as the weak US labor report offset the impact of further comments on the desirability of a weaker Japanese currency by the country's new finance minister, Naoto Kan.
In late New York trade, the dollar stood at 1.0234 Swiss francs from 1.0332 Thursday.
The pound was at 1.6020 dollars after 1.5932.
"This news has caused speculation of a rate hike to be put on ice, while speculation that the Federal Reserve may extend stimulus measures to spur the lagging economy has increased," said PNC Bank analyst Fred Rabb.
The report "reinforces a dour outlook for private-sector spending as households continue to face a weakening labor market paired with tightening credit conditions," added David Song at Forex Capital Management.
Although the dollar has in recent months gained on "risk aversion" in times of financial market turmoil, traders were focusing on the implications for interest rates, with the US Federal Reserve's main rate still near zero.
The unemployment rate held at 10 per cent, but also reflected a large number of people dropping out of the workforce.
"The unchanged unemployment rate of 10 per cent understates labor market slack, since labor force participation fell sharply," said Sophia Koropeckyj at Moody's Economy.com.
"Accordingly, the broader measure (of unemployment) increased to 17.3 per cent," she said.
In revising data for prior months, the data showed a net gain of 4,000 jobs in November instead of a loss of 11,000 previously reported, the first positive month after 22 months of losses.