* U.S. non-farm payrolls report showed solid jobs creation
* Jobs data does not resolve debate on Fed's winding down of
* Dollar on track for worst weekly loss vs yen in nearly 3
By Gertrude Chavez-Dreyfuss
NEW YORK, June 7 The dollar recovered on Friday
from steep losses in the previous session after a government
report showed a reasonably healthy pace of U.S. job creation in
May, confounding investors' dour expectations before the release
of the data.
The consensus forecast was 170,000 ahead of the jobs number,
according to economists polled by Reuters. However, most
investors had priced in a downbeat figure going into the
non-farm payrolls report after Wednesday's softer-than-expected
U.S. private-sector employment survey and a weak employment
index in the Institute for Supply Management's non-manufacturing
The Labor Department's report showed that the U.S. economy
created 175,000 jobs last month, with the unemployment rate
edging up to 7.6 percent in May from 7.5 percent in April.
However, analysts were heartened by the separate household
survey, which showed employment of 319,000 in May.
Still, the report does not resolve questions about whether
the Federal Reserve will start cutting back its quantitative
easing program. Traders of short-term U.S. interest-rate futures
still expect the Fed to hold rates near zero until early 2015.
"We do not see the number as providing clarity on the state
of improvement in labor markets and the potential for a
reduction in the pace of asset purchases by the Fed," said
Michael Gapen, senior U.S. economist at Barclays Capital in New
He added that the improvement in the labor market remained
moderate and, if anything, the trend suggested that the U.S.
economy was slowing in the second quarter.
"In our view, this means that the Fed is unlikely to take a
decision to taper purchases at its June meeting, preferring
rather to see several more employment reports before the
September FOMC meeting," Gapen said.
In midday New York trading, the euro fell 0.3 percent for
the day to $1.3208. On Thursday, it hit a peak of
$1.3306, its highest in more than three months, after European
Central Bank President Mario Draghi gave no hints that further
monetary easing was imminent.
The euro, however, was poised to end the week on a high note
with gains of 1.8 percent, its best weekly showing since
The dollar, meanwhile, rebounded against the yen to
hit session highs of 97.75 yen, recovering from a two-month low
earlier in the day. Just before the U.S. jobs report, the dollar
was down 1.6 percent. On Thursday, the greenback suffered its
biggest one-day drop against the yen in three years.
It was last at 97.52 yen, up 0.6 percent.
Technical analysts said intraday bias remained on the
downside for dollar/yen, as the rise from 77.13 yen, the low
seen in mid-September last year, has topped out at 103.73.
ActionForex.com said it sees a further fall in the dollar to
the support area of 92.56 yen. On the upside, however, above
98.85 yen will shift the bias back to positive.
For the week, the dollar was on track to post its worst
weekly loss since mid-July 2009.
The greenback also showed gains against the Swiss franc,
sterling, as well as the Australian and New Zealand dollars.
The dollar, however, fell against the Canadian currency,
with the loonie benefiting from a report that showed Canada
added a robust 95,000 jobs in May, its largest monthly addition
of new jobs in 11 years.
By midday, the U.S. dollar was down 0.4 percent at C$1.0225