Canadian unemployment rate rises unexpectedly, weighing on loonie
NEW YORK (MarketWatch) -- The U.S. dollar fell against the euro and other major currencies Friday after a report said private employers added fewer jobs in July than economists expected, raising concerns about the sustainability of the U.S. economic recovery.
The dollar index (DXY 80.40, -0.42, -0.52%) , a measure of the U.S. unit against a basket of major rivals, traded at 80.602, down from 80.815 in North American trade late Thursday.
The euro (EURUSD 1.3264, +0.0078, +0.5916%) changed hands at $1.3237, up from $1.3177.
The dollar dropped versus the Japanese yen (USDYEN 85.1700, -0.6400, -0.7457%) to trade at ¥85.35 from ¥85.76 on Thursday.
Nonfarm payrolls in the private sector rose by an estimated 71,000 in July, the Labor Department said.
Including government employees, the economy lost 131,000 jobs -- a larger-than-predicted drop. The headline figure was expected to decline due to the loss of temporary jobs at the U.S. Census. Read the report on jobs data.
The data will feed into expectations for next week's meeting of U.S. Federal Reserve policy makers. Speculation has risen in recent weeks that the Fed may eventually be inclined to further loosen monetary policy should deflationary threats re-emerge.
"It probably won't be strong enough to remove suspicions that the Fed could tweak policy in a dovish direction next Tuesday," said Steven Barrow, currency strategist at Standard Bank, before the report.
Canadian, European data
ECB's Trichet: Euro-zone economy gaining steam
European Central Bank President Jean-Claude Trichet told reporters the ECB's decision to keep euro-zone interest rates steady in August took into account moderate inflation and economic data showing growth in the second and third quarters.
Weighing on the Canadian dollar, Canada's jobless rate unexpectedly rose to 8% in July from 7.9% in June.
A 139,000 decline in full-time positions was mostly offset by 130,000 part-time gains, Statistics Canada said.
The U.S. dollar (USDCAD 1.0237, +0.0075, +0.7376%) jumped to buy C$1.0253, a gain of 0.8%.
Economists expected the pace of job growth to slow after June data showed a net 93,200 jobs were created.
Earlier, the euro edged to a new session low after data showed German June industrial output unexpectedly fell 0.6% from May. Economists had forecast a 0.7% rise. Read about German industrial data.
The British pound turned lower versus the dollar after June data on U.K. manufacturing output and industrial production came in below forecasts. Read more on U.K. data.
The British pound (GBPUSD 1.5922, +0.0034, +0.2140%) rose to $1.5905 from $1.5878.
