The dollar gained against the euro late Friday, but stayed lower against the yen and Swiss franc after a U.S. jobs report showed surprisingly weak hiring in June.
The dollar initially dropped against the euro after the U.S. said employers added the smallest number of jobs in nine months in June. However, concern that Italy could get caught up in the European debt crisis helped the dollar gain against the euro later in the day.
The yield on Italy's bonds has risen, which means that investors consider the country to be riskier and are asking for a premium to lend to it. On Friday the Italian stock market fell 3.5 percent with financial and bank stocks taking the biggest hit.
Two credit ratings agencies have already issued warnings about Italy's financials, citing concerns about the country's slow economic growth.
"If the Italian situation does not stabilize shortly, it can make the Greek, Irish and Portuguese problems seem like a cake walk," Marc Chandler, the global head of currency strategy at Brown Brothers Harriman, wrote in a research note.
The euro fell to $1.4248 late Friday from $1.4351 Thursday. It had risen as high as $1.4368 earlier in the day before reversing course.
On Friday, the Labor Department said that U.S. employers created 18,000 jobs in June, far less than what economists expected. The unemployment rate increased to 9.2 percent, the highest rate of the year, raising fears that the economic recovery is weakening.
The dollar was lower against most other currencies Friday. It fell to 80.71 Japanese yen from 81.30 Japanese yen Thursday and dropped to 0.8367 Swiss franc from 0.8452 Swiss franc. The British pound rose to $1.6031 from $1.5963.