NEW YORK (MarketWatch) -- The dollar rose Friday after news that the U.S. economy lost far fewer jobs in May than economists feared
Under typical market conditions, that type of market reaction wouldn't be unusual because upbeat economic reports are a standard bullish factor for the U.S. currency. This year, however, the dollar has gotten much of its support because of investors seeking a safe haven when the market gets jittery, and it has been giving back those kinds of gains when more upbeat news like Friday's jobs report dominates the headlines.
"That was a surprise," said David Gilmore, an analyst at Foreign Exchange Analytics. "I think the market got extremely short of dollars and I won't call a major narrative change for now."
"But we'll be keeping an eye on it," Gilmore said.
The dollar index (DXY 80.50, +1.09, +1.37%) , which measures the performance of the greenback against a basket of currencies, rose to 80.520, up 1.3% from 79.446 in North American trade Thursday afternoon.
The government reported the economy shed 345,000 jobs in May. The decline is also the smallest since September, supporting some speculation that the worst of the recession may be past.
The unemployment rate rose to 9.4%, compared to forecasts of 9.2% and up from 8.9% in April. More about the payrolls report.
Earlier this week, the dollar rallied after a report that major Asian central banks vowed to support the U.S. currency and Treasurys.
Concerns over ballooning government spending and related debt issuing had pressured the dollar.
The report on Asian central banks "took one of the major clouds hanging over the dollar," Gilmore said. "A number of pundits were again calling for the collapse of the dollar and that seemed to put an end to those fears for now."
The euro traded at $1.4003, down from $1.4171. The dollar traded at 97.83, up from 96.84 yen.
