The dollar slumped on Friday, stung by a September US jobs report depicting slower hiring that added to doubts the economy was strong enough for the Federal Reserve to raise US interest rates later this year. The dollar's losses against the euro and Swiss franc topped 1 percent before partly recovering, and the dollar index was off nearly 0.40 percent after touching its lowest since September 24.
Payrolls outside of farming rose by 142,000 last month and August figures were revised sharply lower to show only 136,000 jobs added, the US Department of Labor said on Friday. Economists had expected employers to have added 203,000 jobs in September, according to a Reuters poll. "You can't throw lipstick on this pig of a report," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, Menomonee Falls, Wisconsin. "The economy isn't as insulated as many would like to believe."
The data marked the smallest two-month gain in employment in over a year and may fuel fears that a China-led global slowdown is sapping America's economic strength. "This is a weak report that will probably push back the timing of the Fed rate hike to 2016," said Vassili Serebriakov, currency strategist at BNP Paribas, New York. "The dollar will suffer the most against the yen in the short term, although not really against commodity currencies because I would imagine this data would be negative for risk sentiment," he added.
Two weeks ago, after the Fed again decided to keep US rates at historic lows, the dollar fell sharply. But the greenback had since rebounded by around 2.5 percent through Friday, as Fed Chair Janet Yellen and other US policymakers kept alive the prospect of a rate rise later this year, which would mark the first in nearly a decade. The dollar on Friday hit a three-week low against the yen below 119 yen and was last down 0.1 percent at 119.82 yen. Against the Swiss franc, the dollar was off 0.70 percent. The euro was last up 0.3 percent against the dollar at $1.1230.