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FOREX-Dollar, yen hold gains as job losses cloud outlook

Published 07/02/2009, 09:01 PM
Updated 07/02/2009, 09:16 PM

* Dollar holds ground made on bleak U.S. jobless numbers

* U.S. on holiday, volumes likely to be light

* Yen also keeps gains after investors take risk off table

TOKYO, July 3 (Reuters) - The dollar held gains made in the wake of bleaker-than-expected U.S. jobs numbers, hovering near its highest levels in a week against the euro on Friday and pressuring commodity currencies such as the Australian dollar.

U.S. Treasury bonds rose and stocks fell more than 2 percent after a government report showed U.S. employers cut 467,000 jobs in June, far more than expected, while the unemployment rate rose to 9.5 percent.

The data underscored the likelihood that recovery from recession would be long and slow, reducing the attraction of currencies such as the Australian dollar which have rallied this year along with stock markets on optimism about a turnaround.

"Worries that the global economy may not recover so quickly have been lingering but they were subdued as so many people had supported the 'green shoots' theory," said Hideki Amikura, deputy general manager of forex trading at Nomura Trust and Banking.

"But the U.S. jobs data damaged such economic optimism, prompting investors to buy back the yen and the dollar in risk aversion."

The euro fell 0.3 percent to $1.3960 in early Asian trade, after shedding more than 1 percent on Thursday and beating a retreat from this week's one-month high above $1.4200.

Traders said hedge funds sold the euro for dollars in very early trade on Friday, pushing it through $1.40.

The euro also extended losses against the yen, dropping 0.4 percent to 133.82 yen, after falling nearly 2 percent on Thursday.

Adding to pressure on the euro were comments from European Central Bank President Jean-Claude Trichet that euro-zone activity would likely remain weak for the rest of the year. The ECB left its benchmark refinancing interest rate at a record low of 1 percent on Thursday, as expected.

U.S. markets are on holiday on Friday, which could make volumes light.

The dollar edged down against the yen to 95.82 yen although it remained well within a range of 93.50-100 which has limited it since mid-April.

The Australian dollar was also trading around its lowest levels in a week, at $0.7925, now a long way off an eight-month high of $0.8265 set in early June.

It fell more than 2 percent against the yen on Thursday and dipped to 75.78 yen on Friday, also its lowest level in a week. (Reporting by Charlotte Cooper and Rika Otsuka; Editing by Chris Gallagher)

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