Weak US jobs report pushes euro higher vs dollar

AP News
Posted: Jun 01, 2012 4:14 PM
Weak US jobs report pushes euro higher vs dollar

After plunging to a 23-month low in early trading, the euro recovered against the dollar on a disappointing U.S. jobs report.

Before the jobs report, worries about Europe's ongoing debt crisis pushed the euro to $1.2286, its lowest point against the dollar since July 2010. The euro popped after the report and kept its gains for most of the day.

The euro was worth $1.2424 late Friday, up from $1.2366 late Thursday.

American employers added just 69,000 jobs in May, the fewest in a year. The unemployment rate rose to 8.2 percent from 8.1 percent. Economists expected a gain of 158,000 jobs.

UBS currency strategist Geoffrey Yu said that the euro rose after the jobs report because traders initially believed the Federal Reserve may need to launch another round of bond-buying to help the economy. Yu said that the dollar stabilized as traders recognized that the Fed will likely hold off on more action unless the economy worsens.

The Fed has launched two rounds of bond purchases, most recently in August 2010, to lower long-term interest rates and make stocks appear more attractive to investors.

Lower interest rates can weigh on a currency by reducing the returns investors get from holding it.

The U.S. report overshadowed Europe's own weak jobs report. Unemployment in the 17 countries that use the euro was unchanged at 11 percent in April _ the highest level since the single currency was introduced back in 1999.

The dollar was mixed against other major currencies Friday. The British pound fell to $1.5366 from $1.5414 late Thursday. The dollar rose to 1.0395 Canadian dollar from 1.0329 Canadian dollar.

The dollar fell to 78.08 Japanese yen from 78.33 yen and to 0.9660 Swiss franc from 0.9711 Swiss franc.