Investing.com - The dollar fell against the other main currencies on Friday after data showing that the U.S. economy added the fewest jobs in three years in December tempered expectations that the Federal Reserve would cut its stimulus program again this month.
The U.S. economy added 74,000 jobs in December, the Labor Department said, the smallest increase since January 2011 and well below expectations for 196,000 new jobs.
The unemployment rate fell to a five year low of 6.7% from 7% in November, but this was due in part to people dropping out of the labor force. The labor participation rate fell to an almost 35-year low of 62.8%.
Inclement weather in December contributed to the slowdown in hiring, as the construction sector cut 16,000 jobs, the biggest drop in the industry in 20 months.
The Fed cited a stronger labor market in its decision to cut its asset purchase program by USD10 billion in December, reducing it to USD75 billion-a-month.
EUR/USD rose to 1.3686, the highest level since January 2 and was last up 0.45% to 1.3668. For the week, the pair gained 0.29%.
The dollar was also down against the yen. USD/JPY fell to lows of 103.95, the weakest level since December 23 and was last down 0.65% to 104.17.
USD/CHF touched lows of 0.9006, the lowest since January 3 and settled at 0.9023, down 0.49% for the day.
Elsewhere, the dollar rose to more than four year highs against the Canadian dollar on Friday, following an unexpectedly weak Canadian jobs report for December.
Statistics Canada said the economy shed 45,900 jobs last month, while the unemployment rate rose to 7.2%, rising above the U.S. unemployment rate for the first time since September 2008.
USD/CAD rose to 1.0945, the highest level since October 2009, and was last up 0.47% to 1.0891. For the week, the pair advanced 2.18%.
The CFTC Commitments of Traders report for the week ending January 7 showed that speculators have been aggressively shorting the Canadian dollar. Gross shorts have risen to 91,000 contracts, up 4,915 from the previous week.
Meanwhile, net long euro positions were cut in half, falling from 30,600 contracts to 14,500. The net short yen position of 129,000 contracts is the smallest since late November.
In the week ahead, investors will be closely watching U.S. data on retail sales, inflation and consumer sentiment, as well as speeches by two Federal Reserve officials on Tuesday.
U.K. data on retail sales and inflation will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 13
Australia is to publish data on the number of new home loans granted, a strong indicator of demand in the housing market.
The Bank of Canada is to release its quarterly business outlook survey, a leading indicator of economic health.
Later Monday, New Zealand is to release private sector data on business confidence.
Tuesday, January 14
Japan is to produce data on the current account.
The U.K. is to release data on consumer price inflation, which accounts for the majority of overall inflation.
The euro zone is to publish data on industrial production, a leading indicator of economic health.
The U.S. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The nation is also to release data on import prices and business inventories.
Also Tuesday, Federal Reserve Bank of Philadelphia President Charles Plosser and Dallas Fed President Richard Fisher are to speak.
Wednesday, January 15
Australia is to publish data on new vehicle sales, a leading indicator of consumer confidence.
Switzerland is to produce data on retail sales.
The U.S. is to release data on producer price inflation and a report on manufacturing activity in the New York region.
Thursday, January 16
Japan is to release data on core machinery orders and tertiary industry activity.
Australia is to publish data on the change in the number of people employed and the unemployment rate, as well as a private sector report on inflation expectations.
The euro zone is to release data on consumer inflation, while Spain is to hold an auction of 10-year sovereign bonds.
Canada is to release data on foreign securities purchases.
The U.S. is to publish reports on consumer price inflation and initial jobless claims, in addition to data on manufacturing activity in Philadelphia. Meanwhile, Federal Reserve Chairman Ben Bernanke is to speak at an event in Washington.
Friday, January 17
Switzerland is to publish data on producer price inflation.
The U.K. is to release data on retail sales.
The U.S. is to wrap up the week with the closely watched preliminary reading of the University of Michigan consumer sentiment index. The U.S. is also to release data on building permits, housing starts and industrial production.