Disappointing US jobs data dents dollar

Disappointing US jobs data hit the value of the US dollar on Friday, although equity markets around the world headed into the weekend with gains after a volatile week.

US job creation slowed in August, with the non-farm payrolls (NFP) data showing that the world's largest economy added 156,000 net new positions for the month, which was far fewer than expected.

Unemployment rose a tenth of a point to 4.4 percent, while wages increased only modestly.

The NFP data was eagerly awaited for fresh clues of the direction of US interest rates at the Federal Reserve's monetary policy meeting scheduled for later this month.

"If Federal Reserve policy makers were already starting to question the need for another rate hike this year –- and the pace thereafter -– then this week’s data won’t have made them feel any more comfortable," said analyst Craig Erlam at trading firm Oanda.

The dollar plummeted in the moments after the jobs numbers were released, but quickly regained most of its losses.

Higher interest rates would make US bonds more attractive as investment, including to foreign investors who would need to buy dollars.

"Any hopes that the dollar could continue its rebound with an encouraging US jobs report appears to have been thrown out the window following a 'hat-trick' of losses in the recently released jobs report for August," said Jameel Ahmad, chief market analyst at FXTM.

"The number of jobs created in August, earnings and the unemployment rate, all fell short of expectations," he added, noting that the figures for number of jobs created in both June and July were also revised lower.

The dollar did manage to gain against the euro however, as shortly after the US jobs data, a Bloomberg News report said the European Central Bank (ECB) may not decide what to do about its bond buying programme until the end of the year.

The euro has been rising in recent weeks as investors, encouraged by good economic news coming out of the eurozone, believed the ECB would announce soon that it would begin to scale back its purchases of bonds, which are meant to support economic recovery.

European equities managed to keep the early gains following the US jobs data, while Wall Street stock indices also moved higher at the open.

London showed a 0.1 percent gain in afternoon trading, while Frankfurt rose 0.8 percent and Paris 0.9 percent.

The Dow climbed 0.2 percent in the first minute of trading.

Global equities dived at the start of this week after nuclear-armed North Korea fired a ballistic missile over Japan, sparking fears over a possible conflict.

Investors also fretted over the impact of deadly monster storm Harvey, which flooded streets and highways in Texas before hitting Louisiana.

Oil prices meanwhile resumed their downward momentum as dealers assess the impact of Harvey on the crude-rich Gulf Coast, with dozens of refineries out of action -- meaning that the commodity cannot be processed.

The market had soared on Thursday, in line with a spike in US gasoline prices, on worries over the impact of Harvey on the region.

"Crude prices regained some mojo yesterday and joined the race higher led by products as a quarter of US refining capacity remained paralysed in the wake of Hurricane Harvey," noted PVM analyst Stephen Brennock.

To help alleviate the shortage of crude, Washington has decided to open its Strategic Petroleum Reserve, sending a million barrels of crude to the Phillips 66 refinery on Lake Charles in Louisiana to keep it operating.

- Key figures around 1330 GMT -

London - FTSE 100: UP 0.1 percent at 7,436.95 points

Frankfurt - DAX 30: UP 0.8 percent at 12,151.84

Paris - CAC 40: UP 0.9 percent at 5,130.42

EURO STOXX 50: UP 0.8 percent at 3,447.97

New York - Dow: UP 0.2 percent at 21,985.93

Tokyo - Nikkei 225: UP 0.2 percent at 19,691.47 (close)

Hong Kong - Hang Seng: DOWN 0.1 percent at 27,953.16 (close)

Shanghai - Composite: UP 0.2 percent at 3,367.12 (close)

Euro/dollar: DOWN at $1.1904 from $1.1910 at 2100 GMT on Thursday

Pound/dollar: UP at $1.2988 from $1.2932

Dollar/yen: DOWN at 109.91 yen from 109.97 yen

Oil - Brent North Sea: DOWN 26 cents at $52.60 per barrel

Oil - West Texas Intermediate: DOWN 16 cents at $47.07

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source:AFP