* No jobs growth in Aug; expectations of Fed stimulus rise
* Swiss franc rises, euro slumps on risk aversion
* SNB absent from forward market, politicians give support
(Updates prices, adds quotes)
By Julie Haviv
NEW YORK, Sept 2 The U.S. dollar slid against
the Swiss franc and yen on Friday as bleak jobs data raised
expectations the Federal Reserve may soon embark on another
round of bond-buying, a measure that could drag the dollar down
The Swiss franc extended already impressive gains for the
week as concerns about the euro zone debt crisis and a gloomy
economic outlook prompted safe-haven buying by fund investors,
who tested the Swiss National Bank's resolve.
The U.S. Labor Department on Friday reported there was no
jobs growth in August, the worst performance in nearly a year.
The Labor Department also revised down its figures on jobs
growth in both June and July. [ID:nOAT004865]
"The bottom line is that the worse the data is, the more
likely it is we get additional QE," said Brian Dolan, chief
strategist at Forex.com in Bedminster, New Jersey.
"That will keep the dollar heavy against the yen and Swiss
franc, and now we're even seeing it weaken a bit against the
euro and sterling."
The U.S. Federal Reserve pumped about $2.3 trillion into
the economy through two rounds of bond buying, known as
quantitative easing. The programs were tantamount to printing
money and therefore diluted the value of the dollar.
In early afternoon New York trade, the dollar was down 0.2
percent at 76.78 yen JPY= and 1.1 percent lower against the
Swiss franc at 0.7864 franc CHF=.
The increased expectations of a new round of stimulus by
the Fed when its policy-setting committee next meets on Sept.
20-21 was seen as continuing to weigh on the dollar.
"With the number coming in at zero, and the prior (month)
revised 32,000 lower, the Fed has gained greater political
ability to enact a version of QE3 at their meeting in
September," said Douglas Borthwick, managing director at Faros
Trading in Stamford, Connecticut. "We see this as terrifically
bearish for the dollar, bullish for gold and bullish for
"QE3 will accomplish two things: assets in the U.S. will be
further inflated, and the weaker dollar will help U.S.
multinationals as their foreign earnings will inflate on the
weaker dollar," Borthwick said.
For graphic on U.S. non-farm payrolls:
Risk aversion caused investors to shun the euro, fueled by
worries about Greece meeting its deficit targets, concerns over
Germany passing plans to reform the European bailout fund this
month, and Italy's backtracking on budget austerity.
The euro EUR= traded down 0.4 percent at $1.4208, a
The Swiss franc pared gains after top Swiss politicians
said they fully support the steps the SNB has taken.
After several weeks of activity last month, there was no
sign of the Swiss National Bank in the Swiss forward market to
reinject liquidity and stem strength in the currency, whose
stellar performance is a problem for its exporters, although
traders remained on alert for more measures.
SNB injections of liquidity last month pushed Swiss deposit
rates into negative territory, forcing the currency to retreat
from record highs.
"People are getting used to the fact that negative deposit
rates are not much of a deterrent to the market if the Swiss
franc appreciates sharply," said Chris Turner, head of forex
strategy at ING. "Flows are increasingly a function of safety
and not return."
The euro was last down 1.5 percent to 1.1174 francs
EURCHF=, extending a rapid dive from nearly 1.2000 francs on
Monday and putting the single currency on course for its
biggest ever weekly fall.
(Additional reporting by Steven C. Johnson, Nia Williams and
Neal Armstrong; Editing by Leslie Adler)