The dollar rose against major currencies on Thursday after bleak US jobs data renewed concerns about the economy and enhanced the greenback's safe-haven appeal. US Treasury bonds rose and stocks fell more than 2 percent after a government report showed US employers cut 467,000 jobs in June, far more than expected, while the unemployment rate rose to 9.5 percent.
The data raised some risk aversion, which also pushed the yen higher and drove down higher-yielding, commodity-linked currencies like the Australian and New Zealand dollars. "(The jobs data) has raised a doubt for a lot of traders in the market about the recovery," said Kathy Lien, director of currency research at GFT Forex in New York.
"At this point, traders and investors will probably need some really good news before they can be convinced to buy stocks and sell dollars once again." In late New York trading, the ICE Futures US Dollar Index, which tracks the value of the greenback against a basket of currencies, rose 0.8 percent to 80.269. The euro was down 1.1 percent at $1.4002, retreating from $1.4201 hit on Wednesday, its highest since early June.
"The weak jobs report reinforced a trend already in place in the forex market prior to the release, that is, that the dollar was oversold," said Camilla Sutton, a currency strategist at Scotia Capital, in Toronto. "Euro/dollar has been stuck in a range and with weak data like today's, the euro will not get the support to break through $1.42," she added.
Adding to pressure on the euro were comments from the 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, as expected.
The dollar slipped 0.8 percent to 95.85 yen, after trading as high as 96.89 yen before the jobs report. Volume was light ahead of the three-day weekend for the Independence Day holiday in the United States. Financial markets will be closed on Friday and will re-open on Monday. The dollar also benefited from a Chinese Foreign Ministry official's comments, which dampened speculation about diversification of currency reserves.
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