April 4, 2014 / 11:22 AM / in 4 years

Dollar slips as U.S. posts jobs gains

NEW YORK (Reuters) - The dollar fell against other major currencies on Friday after rising in early trading even though U.S. data showed solid jobs gains for a second straight month.

The March jobs report was generally in line with market expectations and eases the way for the Federal Reserve to keep cutting back its bond-buying program, analysts and strategists said.

The dollar index .DXY was off 0.07 percent at 80.415 after touching 80.599, its highest since February 27.

Friday’s decline ended a three-day run of gains for the index, which is composed of six major currencies traded against the dollar, but didn’t erase an overall rise for the week.

“The dollar on balance logged a bullish week thanks to steady signs of an improving U.S. economy, which stood in contrasts to growing expectations of potentially easier policy steps in Japan and Europe,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

The greenback has been mostly rising since mid-March but was down 0.17 percent on Friday against the euro at $1.3695 and off 0.61 percent against the yen at 103.29 yen after hitting a session high of 104.12 after the employment report.

“The numbers were sufficiently in line so the bigger picture isn’t changed going forward for the Fed,” said currency strategist Cameron Umetsu at UBS in Stamford, Connecticut.

U.S. nonfarm payrolls increased by 192,000 jobs last month after rising 197,000 in February, the Labor Department said. The unemployment rate was unchanged at 6.7 percent, as Americans flooded the labor market.

Economists polled by Reuters had expected employment to increase by 200,000 last month and the unemployment rate to fall one-tenth of a percentage point.

Some traders hoping the jobs data would be more robust were disappointed, though the report will likely encourage the Fed to continue reducing its massive monetary stimulus, a process known as tapering, according to Anthony Valeri, investment strategist at LPL Financial in San Diego.

“It’s a Goldilocks report, not too warm and not too cold, and puts pressure on the next report in May to be good,” Valeri said. “It doesn’t change the pace of tapering and shows the economy is still on track.”

Next week’s release on Wednesday of minutes from the latest Fed policy-making panel will be a focus of the currency market.

“The greenback’s underlying story remains positive and will look for further support next week in Wednesday’s Fed minutes,” Manimbo said. “Fed records that bolster the case for a rate hike next year would ... put another plank of support under the greenback.”


On Thursday the euro had hit a one-month low against the dollar after European Central Bank President Mario Draghi said the bank’s Governing Council was unanimous in its commitment to also using “unconventional instruments within its mandate in order to cope effectively with risks of a too-prolonged period of low inflation.”

Unconventional instruments include quantitative easing - essentially printing money to buy assets. Some euro zone central bankers considered such measures highly undesirable until now.

The growth-sensitive Australian dollar got a boost after the U.S. jobs report and touched a session high of $0.9307, before settling back to $0.9283 for a gain for the day of 0.57 percent.

Additional reporting by Anirban Nag in London; Editing by Peter Galloway and James Dalgleish

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