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FOREX-Dollar down vs yen, up vs euro after US jobs data

Published 06/04/2010, 09:49 AM
Updated 06/04/2010, 09:51 AM

* Dollar falls vs yen after below consensus US jobs data

* Euro extends losses, hits lowest in more than 4 years

* Traders cite macro accounts as sellers of euros

(Adds details, comments. Changes byline)

By Vivianne Rodrigues

NEW YORK, June 4 (Reuters) - The U.S. dollar fell versus the yen on Friday but rose against the euro after a government report showed U.S. non-farm payrolls grew at a slower than expected rate in May.

Analysts said the data disappointed investors looking for a stronger figure and reinforced the view that the recovery in the U.S. economy and labor market was a gradual one.

"It's mainly disappointing," said Vassili Serebriakov, senior currency strategist at Wells Fargo Bank in New York. "The pace of the recovery in the jobs sector is not as fast as some of the optimistic expectations in the market."

U.S. employers created 431,000 jobs in May, the U.S. Labor Department said, below the 513,000 increase predicted by analysts polled by Reuters. The jobless rate fell more than expected to 9.7 percent from 9.9 percent in April. For more, see [ID:nOAT004640]

In morning trading in New York, the dollar was 0.7 percent lower at 92.06 yen , after hitting a session low of 91.91 according to Reuters data.

"We've seen the dollar fall versus the yen. The euro has also extended its losses and that's mainly a risk aversion thing. The market has a very cautious tone right now," said Serebriakov.

The euro extended losses and was last trading down about 1 percent at $1.2052 . It traded as low as $1.2019, according to Reuters data.

Selling pressure on the single currency started prior to the U.S. jobs report, with the euro hitting its lowest against the dollar in more than four years after comments by French Prime Minister Francois Fillon on exchange rates.

Fillon said he was not concerned by the current level of the euro to the dollar and that he saw only "good news" in the parity between the two currencies. Later the remarks were clarified saying his reference to "parity" was about the general evolution of the exchange rate between the euro and the dollar. [ID:nWEA4967]

Still, the comments caused the euro to fall steeply also against the Swiss franc, which traders attributed to an absence of bids from the Swiss National Bank, which has recently intervened to keep the franc from appreciating.

Traders cited model and macro accounts, as well as central banks, as selling the single currency.

"The euro was already getting hammered... and with the nonfarm payrolls not living up to expectations, the risk trade is under assault from every angle," said Boris Schlossberg, director of currency research at GFT Forex, in New York.

"This could push the euro below $1.20, as the market had been so primed for a stronger jobs number."

There are so many stops from here to $1.20 that the temptation to run them is going to be overwhelming," he said.

(Additional reporting by Steve C. Johnson and Gertrude Chavez-Dreyfuss in New York; Editing by Chizu Nomiyama)

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