Dollar dips vs major currencies

NEW YORK (AFX), August 4 – The dollar fell against most major currencies Friday after disappointing jobs data deepened doubts over prospects of further interest rate rises.

The 12-nation euro bought $1.2875 in afternoon New York trading, up from $1.2805 in New York late Thursday. The British pound rose to $1.9082 from $1.8883.

The dollar also lost ground against the Japanese currency, sliding to 114.39 yen from 114.91 yen.

On Friday, the Labor Department reported that employers added only 113,000 new jobs in July, well short of economists’ forecasts of about 145,000.

The civilian unemployment rate climbed to 4.8 percent from 4.6 percent in June, where it had been expected to stay.

The Federal Reserve is closely watching new economic data to determine the future course on interest rates, and Friday’s figures added to evidence that the economy is slowing even as inflation rises.

A long string of interest rate hikes has boosted the dollar, but the central bank has indicated that it is nearing the end of its credit tightening campaign. The Fed meets next week on Tuesday to set monetary policy.

Higher interest rates support a currency by making assets denominated in that currency more attractive to investors.

The euro gained modestly Thursday after the European Central Bank raised its key refinancing rate by a quarter point to 3 percent but stopped short of sending a strong signal about future movements.

The pound also was boosted Thursday by the Bank of England’s unexpected quarter-point increase to 4.75 percent. Both currencies, however, had backed off their gains before Friday’s jobs data.

In other trading, the dollar bought 1.2219 Swiss francs, down from 1.2305 late Thursday, and 1.1286 Canadian dollars, up from 1.1251.