* Nonfarm payrolls rose 165,000 in April, jobless rate at
* Dollar on pace for biggest one-day rise in two weeks vs
* Euro finds support at $1.3050 area, remains vulnerable
By Wanfeng Zhou
NEW YORK, May 3 The dollar surged more than 1
percent against the yen on Friday after surprisingly strong U.S.
April jobs data fuelled optimism the U.S. economy may be more
resilient than some had feared.
U.S. employment rose more than expected in April, with
nonfarm payrolls rising 165,000, while job increases for the
previous months were revised higher. The unemployment rate fell
to a four-year low of 7.5 percent.
The dollar had come under pressure lately after
disappointing economic data stoked concern about the recovery
and investors pared back expectations the Federal Reserve may
taper its bond purchases anytime soon.
"The spring slowdown may not be as pronounced as feared,"
said Omer Esiner, chief market analyst at Commonwealth Foreign
Exchange in Washington.
"It is good news for the dollar especially in light of the
Fed's statement this week which put even more focus on upcoming
U.S. economic numbers."
The dollar rose 1.1 percent to 99.05 yen, on pace for
its biggest one-day rise in two weeks. It hit a session peak of
99.26 yen, according to Reuters data.
The Fed said on Wednesday after its policy meeting it will
continue buying $85 billion in bonds each month to keep interest
rates low and spur growth, and would step up purchases if needed
to protect the economy.
"The job market and the economy in general appear to be more
resilient than investors had feared," said Joe Manimbo, market
analyst at Western Union Business Solutions in Washington.
"The weight this jobs report carries from month to month can
go some way to reviving the notion that the Fed could taper
later this year."
The euro edged higher against the dollar, rebounding after
finding support in the $1.3050 area.
It last traded 0.5 percent higher at $1.3132, having
hit a session low of $1.3033 in the wake of the jobs data.
Traders said the euro failed to move further below $1.3050,
leading to an intraday rebound.
The single currency climbed to a session peak after data
showed data showed the pace of growth in the vast U.S. services
sector slowed in April to its weakest in nine months, while U.S.
factory orders fell sharply in March.
But analysts said sentiment on the euro remained negative
after European Central Bank President Mario Draghi said Thursday
the bank was technically ready for negative deposit rates and
noted downside risks to the economy.
A negative deposit rate would penalize banks for hoarding
cash and could drive money out of the euro zone.
"Putting the deposit rate into negative territory comes at a
significant cost, undermining especially money market fund flows
into weaker peripheral banks," Morgan Stanley said in note.
"Bearing these costs in mind and Draghi showing his
readiness to use the negative deposit rate anyway is one of the
clearest indications that the ECB wants a weak exchange rate."
Against the yen, the euro rallied 1.7 percent to 130.13 yen