Dollar slides vs yen, franc on dismal jobs data

(Reuters) - The dollar dropped against the yen and Swiss franc on Friday as dour U.S. jobs data strengthened expectations the Federal Reserve will leave interest rates low well into next year, prompting investors to embrace alternate safe-havens.


U.S. employment growth ground to a halt in June, the U.S. Labor Department said, with employers hiring the fewest workers in nine months, dampening hopes the economy was on the cusp of regaining momentum after stumbling in recent months.

The euro hit a session low of $1.4204 on Reuters data as markets became wary of taking on riskier assets following the jobs report. But it then trimmed losses, with traders saying the sharp drop toward the $1.42 level triggered short-term buying.

It last traded at $1.4258, down 0.7 percent on the day. At current prices the euro is down 1.8 percent against the dollar this week.
The report showed nonfarm payrolls rose only 18,000, well below economists' expectations for a 90,000 rise. The unemployment rate, which the Federal Reserve considers too high, unexpectedly rose to 9.2 percent from 9.1 percent. Economists had expected no change in this gauge of labor slack.

The dour data caused U.S. short-term interest rate futures traders to bet the Federal Reserve will stay on hold until well into 2012.
The Fed last week ended its second round of quantitative easing, called QE2. The program, which entailed buying $600 billion in Treasuries securities, was negative for the dollar as it was tantamount to printing money.
The safe-haven Swiss franc and Japanese yen were the main beneficiaries as investors sought safety.

The dollar fell as low as 80.48 yen following the jobs data from 81.48 yen earlier. It was last down 0.7 percent at 80.64 yen. Against the franc, the greenback was last trading down 0.8 percent at 0.8372 francs.
The euro fell 1.4 percent to 115.02 yen and dropped 1.5 percent at 1.1942 francs.

While interest rate differentials continue to favor the euro and is a primary reason for its 6.7 percent gain against the dollar year-to-date, concerns about Europe's sovereign debt crisis are an obstacle. (Reuters)