* U.S. jobs report disappoints, dollar dive short-lived
* Euro takes hit from objections to bond-buying
* Constitutional Court also leaves door open to acceptance
* Canadian jobs data better-than-expected, pushes loonie
By Daniel Bases
NEW YORK, Feb 7 The dollar see-sawed after a
weaker-than-expected U.S. jobs report on Friday that muddies the
waters but is unlikely to dissuade the Federal Reserve from
diverting from its path of steadily removing monetary stimulus
from the U.S. economy.
U.S. nonfarm payrolls growth in January came in at a
disappointing 113,000 against a consensus of 185,000, initially
sending the greenback sharply lower. However, a bright spot in
the report showed the proportion of working age Americans who
have a job or are looking for one increased.
After a sharp decline against the euro in the immediate
aftermath of the report, the dollar has gained back some ground,
but still finds itself weaker. The euro is up 0.18 percent to
$1.36140, after having dropped back from its session
high $1.36490 on the EBS trading platform.
The reaction to the jobs report has been nuanced and mixed.
Nick Bennenbroek, head of currency strategy at Wells Fargo
Securities in New York, said that as the market digested the
data and looked to the next Fed meeting in mid-March, "the bar
is pretty high for them to deviate from the path."
"You could argue the implications of today's report are not
particularly clear cut for March's meeting and the path of Fed
policy. Therefore we have the mixed reaction for the dollar," he
The jobs report was the second month of weak hiring,
although the jobless rate did decline to 6.6 percent from 6.7
A second factor holding back the euro on Friday was
Germany's constitutional Court's decision to refer a complaint
against the European Central Bank's bond-buying program to the
European Court of Justice.
The complaint says the ECB's plan, which pumps money into
the financial system much the same way as the U.S. quantitative
easing program, oversteps its mandate and violates a ban on it
The ECB's Outright Monetary Transactions (OMT) program,
announced by President Mario Draghi in September 2012 at the
height of the sovereign debt crisis and as yet unused, is widely
credited with pulling the euro zone back from the brink.
"The ECB has to quickly assess what repercussions the ruling
will have for the range of tools available to calm markets,"
said Christian Schulz, senior economist at Berenberg.
"Ironically, depending on the exact decision, the court may have
made a much more wide-ranging quantitative easing program at the
ECB more likely."
The euro traded up 0.30 percent to 139.16 yen. The
dollar also advanced against the yen, after regaining ground
from the initial sell-off after the jobs data. In midday New
York trade the greenback rose 0.14 percent to 102.22 yen.
In contrast to the weak U.S. jobs data was an upbeat report
from Canada which showed a bigger-than-expected increase in its
"I think this increase in employment in January dampens
expectations of the possibility of the Bank of Canada having to
cut rates. But certainly with inflation remaining low, there's
no pressure to start moving rates higher," said Paul Ferley,
assistant chief economist at Royal Bank of Canada.
The U.S. dollar fell 0.48 percent to C$1.1014. It had
been as low as C$1.0964, its weakest point in 2-1/2 weeks.
Sterling extended its gains against the greenback as the
trading session wore on, climbing 0.45 percent to $1.6395
, its best level of the week.