(Recasts with reaction to U.S. data, updates prices, adds
comment, changes byline, changes dateline, previous LONDON).
NEW YORK, April 4 (Reuters) - The dollar fell against the
euro and yen on Friday in volatile trading with investors
seeing both positive and negative impacts in the U.S. jobs
report for March.
Government data showed U.S. employers cut payrolls for a
third straight month in March, which some investors took as
increasing the chance of more aggressive U.S. interest rate
cuts which undermine demand for the dollar.
The drop of 80,000 jobs in the March non-farm payrolls
report was the biggest monthly decline in five years as the
economy headed into a downturn. For more details, click
[].
"The payrolls number confirms what many people know about
the U.S. economy -- that it is weakening," said Adam Fazio, a
currency strategist at CIBC World Markets, New York.
The euro <EUR=> was last up 0.3 percent at 1.5723 but well
off March's record peak above $1.59.
The dollar was down 0.4 percent against the yen at 101.86
yen <JPY=>, still on track for its biggest weekly percentage
gain since February 2004 at current prices.
The dollar fell 0.2 percent against a basket of six
currencies to 71.988 <.DXY>, and down 0.4 percent at 1.0056
Swiss francs <CHF=>.
The dollar at first tumbled on the report but even as it
fell, some foreign exchange analysts were suggesting the
dollar's downward momentum would be short-lived. Briefly that
proved correct with the dollar moving back into positive
territory against the yen before resuming its decline.
"While (the data) is weaker than expected, the report is
not especially alarming," said Brian Dolan, chief currency
strategist, at Forex.com in Bedminster, New Jersey. "This is
likely to keep risky assets from collapsing after the initial
shake-out lower."
HAS THE FED DONE ENOUGH?
Overall, investor sentiment has improved in recent
sessions, and futures traders are now expecting only a 25 basis
point rate cut from the Federal Reserve this month <FEDWATCH>.
The Fed has slashed rates since September by a total of 3
percentage points to 2.25 percent to deal with the credit
crisis and shield the economy from an ailing housing sector.
Late on Thursday, San Francisco Fed President Janet Yellen
echoed comments on the economy made by Fed Chairman Ben
Bernanke earlier this week, saying the U.S. economy has "all
but stalled and could contract" in the first half of 2008.
[]
Elsewhere, the Australian dollar <AUD=> managed a 0.3
percent gain against its U.S. counterpart despite February
retail sales in Australia unexpectedly dipping 0.1 percent from
the previous month.
Reserve Bank of Australia Governor Glenn Stevens said on
Friday that growth in domestic demand was moderating despite
uncomfortably high inflation, suggesting that interest rates
had risen enough for now [].
In addition, the dollar was up 0.2 percent against the
Canadian dollar <CAD=> after an early Canadian government
report showed that Canada's unemployment rate rose more than
expected, fueling expectations for rate cuts from the Bank of
Canada.
(Additional reporting by Gertrude Chavez-Dreyfuss in New York
and Veronica Brown in London)
(Reporting by Nick Olivari; Editing by Tom Hals)
