FOREX-Dollar down from 7-week peak vs euro; U.S. jobs disappoint
* U.S. jobs data disappoints investors betting on cut in Fed's stimulus
* Euro gains still muted by Draghi being dovish on ECB monetary policy
* Yen recovers from six-week low on Japanese exporters buying
NEW YORK, Sept 6 (Reuters) - The dollar fell from a seven-week high against the euro on Friday after an eagerly anticipated U.S. jobs report disappointed investors hoping for data that would pave the way for the Federal Reserve to begin unwinding its monetary stimulus this month.
U.S. job growth was less than expected in August and the unemployment rate dropped to a 4-1/2-year low as workers gave up the search for work, which could delay Fed plans to scale back its massive monetary stimulus later this month.
Nonfarm payrolls increased 169,000 last month, the Labor Department said on Friday, adding to signs that third-quarter economic growth may have slowed down. The unemployment rate was 7.3 percent.
The job counts for June and July were revised to show 74,000 fewer positions added that previously reported.
"Although the unemployment rate was lower, there were negative revisions of 74,000 and that has pushed both U.S. yields and the dollar lower," said Kiran Kowshik, currency strategist, BNP Paribas, New York.
"But those downward revisions come after many months of upward revisions. So overall, I think the trend still shows an improving labor market. We at BNP Paribas believe that the Federal Reserve will taper in December anyway, so this report is still consistent with that view."
The report slammed dollar investors and reversed early trading patterns. The euro was last up 0.1 percent at $1.3130 and the dollar was down 0.9 percent against the yen at 99.20 yen.
Prior to the jobs data, the euro fell to $1.3103, a seven-week low with traders citing a reported option barrier at $1.3100. The euro was also hurt by below-forecast German industrial output data.
The dollar hit a six-week high of 100.24 yen in Asian trade before cautious Japanese exporters took that opportunity to convert dollars to yen just in case the U.S. payrolls data proved a disappointment.
The dollar index was at 82.332, down 0.4 percent, still not far from a recent seven-week peak of 82.671.
The prospect of the Fed withdrawing some of the flood of cheap dollars, which has benefited emerging markets in recent years, has prompted a round of soul-searching and policy discussions among leading developing nations.
"This NFP number is a major fail for the U.S. administration, said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
"Today's data, in combination with Syrian uncertainties are likely to keep the U.S. Fed on the sidelines for now," Borthwick said.
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