The dollar rallied across the board on Friday in volatile trading, with investors relieved by data showing U.S. job losses in December were not as dismal as many had feared. Traders had positioned themselves for a gruesome non-farm payrolls number following a U.S. private sector jobs report earlier this week which showed hefty losses of 693,000.
However, many of those short trades were squeezed when the government reported a headline figure of 524,000, slightly better than the market's revised 550,000 forecast. "The dollar has dodged an economic bullet," said Nick Bennenbroek, head of currency strategy, at Wells Fargo in New York.
"Even though the report was generally discouraging, the headline payrolls decline was broadly as forecast. And perhaps most significantly for the dollar, we don't think today's report will accelerate further monetary easing from the Federal Reserve."
The euro hit session lows versus the dollar at $1.3588. It was last at $1.3615, down 0.8 percent on the day.
The single euro zone currency had hit session highs immediately after the data's release.
Against the yen, the dollar was flat at 91.04 , off session lows at 90.55.
The ICE Futures' dollar index .DXY, a gauge of the greenback's value versus six major currencies, rose 1 percent to 82.371.
Despite the dollar's rebound, analysts said there is plenty in the jobs report that bodes ill for the U.S. economy and its currency.
The 7.2 percent unemployment rate was the highest in nearly 16 years and the upward revisions in November and October have pushed total job losses in the last four months to 1.9 million.
Total job reductions for 2008 were 2.6 million, the largest decline in 63 years.
"There was nothing good in the report," said Kathy Lien, director of currency research at GFT Forex in New York. "The U.S. is in recession and in previous recessions, job cuts have lasted for at least 15 months."
So far Lien said the U.S. economy has only seen 12 consecutive months of job losses which suggests that non-farm payrolls will not turn positive until the second half of the year.
Earlier, data showed showed a bigger-than-expected drop in French industrial output, adding to the argument that the euro zone economy is further deteriorating, and keeping selling pressure on the euro.
The euro ultimately received little support from an unexpected rise in euro zone retail sales, as the outlook for consumer demand remains weak amid plunging business morale and growing unemployment.
* U.S. job loses at 524,000; unemployment rate at 7.2.pct
* Euro pressured by mixed euro zone economic data (Recasts, adds comments, U.S. data, updates prices, changes byline, dateline; previous LONDON)
However, many of those short trades were squeezed when the government reported a headline figure of 524,000, slightly better than the market's revised 550,000 forecast. "The dollar has dodged an economic bullet," said Nick Bennenbroek, head of currency strategy, at Wells Fargo in New York.
"Even though the report was generally discouraging, the headline payrolls decline was broadly as forecast. And perhaps most significantly for the dollar, we don't think today's report will accelerate further monetary easing from the Federal Reserve."
The euro hit session lows versus the dollar at $1.3588. It was last at $1.3615
* U.S. job loses at 524,000; unemployment rate at 7.2.pct
* Euro pressured by mixed euro zone economic data (Recasts, adds comments, U.S. data, updates prices, changes byline, dateline; previous LONDON)
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