News: 2010-09-03 18:02:00 UTC+00

Dollar Fades Even As Jobs Picture Brightens

The dollar rocketed higher versus the yen but quickly fell back to earth on Friday, as enthusiasm over the latest jobs report fizzled out after a troubling look at the service sector.

Unemployment rose to 9.6% in August, but the private sector added 67,000 jobs to help offset a significant drop in census-related employment.

The eighth consecutive month of private sector jobs growth fueled some risk appetite, giving the dollar an early boost versus the yen.

Later this morning, however, the buck gave back its gains upon the release of data showing the service sector grew at a much slower pace than expected in August.

The dollar rose as high as Y85.20 before puling back to Y84.30. With that, the buck stayed near a 15-year low of Y83.58 set back in August.

The buck hit a fresh 2-week low of $1.2885 versus the euro, having lost more than 2 cents this week.

Eurozone retail sales volume increased in July for the third straight month, largely led by sales of food.

July's modest 0.1 percent increase in Eurozone retail sales raises hopes that Eurozone's export-led recovery is gradually becoming more broad-based, commented Martin van Vliet, an economist at ING Bank NV.

The dollar eased slightly to $1.5450 versus the sterling.

US non-farm payroll employment fell by 54,000 jobs in August, matching the revised decrease in jobs seen in July. Economists had expected employment to fall by about 120,000 jobs compared to the loss of 131,000 jobs originally reported for the previous month.

However, the ISM's non-manufacturing index fell to 51.5 in August from 54.3 in July, although a reading above 50 indicates continued growth in the service sector. Economists had expected the index to show a more modest decrease to a reading of 53.0.

Meanwhile, Atlanta Federal Reserve President Dennis Lockhart said that economists have read too much into the FOMC's August decision to reinvest in longer-term Treasury securities.

"I think the decision has been over-interpreted in some quarters. These interpretations, along with alarmist commentary about deflation and a double-dip recession, are feeding an exaggerated sense of foreboding," Lockhart said.

Copyright(c) 2010 News.com, Inc. All Rights Reserved


Published: 2010-09-03 18:02:00 UTC+00 1 year, 5 months, 1 day, 8 hours, 18 min. ago
 
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