Friday April 4, 2008 - 23:33:03 GMT
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Reuters - www.reuters.com
FOREX News - Dollar falls as U.S. economy posts job decline
(Recasts, updates prices, adds comment, adds byline)
By Steven C. Johnson
NEW YORK, April 4 (Reuters) - The dollar fell on Friday
after a report showed the U.S. economy shed jobs for a third
straight month, confirming fears that the country may already
be in a recession.
Both the euro and yen posted gains on the greenback after
the government said U.S. employers cut 80,000 jobs in March,
more than expected and the biggest monthly fall in five years.
The dollar had recovered most of its earlier losses by late
afternoon, however, as traders said the data did not come as a
big surprise to a market that has long expected the Federal
Reserve to cut interest rates again late this month.
"The jobs data was pretty horrible, but I think yesterday's
jump in weekly jobless claims gave people a good inkling that
today's report was not going to be good," said Greg Salvaggio,
vice president of trading at Tempus Consulting in Washington.
"Most of the negatives for the dollar and the U.S. economy
are already priced in, and there's a feeling that we may be
reaching a bottom in the dollar," he added.
In late trade, the euro was up 0.3 percent at $1.5728
<EUR=>. It had climbed as high as $1.5774 after the jobs data
but ran into aggressive selling at that level.
The dollar was at 101.58 yen <JPY=>, 0.7 percent below late
Thursday, and fell 0.4 percent to 1.0060 Swiss francs <CHF=>.
But it was up 3 percent against the Japanese currency on
the week, on track for its biggest weekly gain since 2004. The
dollar index .DXY, which measures the greenback against a
basket of major currencies, ended the week 0.5 percent higher.
Shaun Osborne, chief currency strategist at TD Securities
in Toronto, said some traders were looking to trim bets in
favor of the euro ahead of a European Central Bank meeting on
The ECB is expected to hold interest rates at 4 percent,
but a string of recent weak euro zone data has traders waiting
to see if President Jean-Claude Trichet softens his stance on
inflation, which could signal a rate cut later this year.
Steady euro zone rates at a time when the Fed has slashed
U.S. benchmark rates from 5.25 percent to 2.25 percent in
recent months have boosted the euro's appeal over the dollar.
U.S. ECONOMY NOT OUT OF THE WOODS
Osborne said the euro will probably settle into a
$1.55-$1.58 range next week, though he said the dollar remained
at risk should U.S. economic data worsen or another Wall Street
bank fall prey to massive mortgage-related losses.
"I still find it hard to believe we are done and dusted
with the move up (in the euro)," he said. "We've had many false
dawns before, and I think we need a more important catalyst
than just saying that the U.S. bad news is priced in before the
The deteriorating employment situation in the United States
also remains a concern, particularly a jobless rate that the
government's data on Friday showed jumped to 5.1 percent from
"Today's jump in unemployment to 5.1 percent may well be a
harbinger of things to come," said Michael Woolfolk, senior
currency strategist at the Bank of New York Mellon.
Elsewhere, the Australian dollar <AUD=> managed a 0.6
percent gain against its U.S. counterpart despite an unexpected
dip in Australian February retail sales data.
The U.S. dollar was up 0.4 percent against the Canadian
dollar <CAD=> after an early Canadian government report showed
that Canada's unemployment rate rose more than expected,
fueling expectations for rate cuts from the Bank of Canada.
(Additional reporting by Nick Olivari; Editing by James
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