Strong US jobs report propels dollar higher

AP Business Writer

NEW YORK (AP) _ A strong U.S. jobs report gave the dollar a lift Friday.

The bump up follows a long decline for the dollar, which hit multi-year lows against several currencies earlier this week. The dollar has suffered from the Federal Reserve's signals that it will keep rates super low for at least the next few months in order to support the economy, which is still struggling with high unemployment and a weak housing market. Other central banks around the world are raising rates to counter rising food and energy prices. Higher rates tend to support currencies.

On Friday, however, investors got some evidence of momentum in the U.S. economy after a recent run of weak data. The government said 244,000 jobs were added in April. Private employers added 268,000 jobs, the most since February 2006. But the jobless rate rose to 9 percent from 8.8 percent the previous month as more people looked for work.

"The firming in the labor market has to be a major topic of conversation at the Fed," said Joel Naroff of Naroff Economics in a research note. "More and more it is looking as if the recovery is on track despite the headwinds it is facing, and the FOMC will have to deal with that trend." The FOMC, or the Federal Open Market Committee, is the Fed panel that sets the country's interest-rate policy.

On Thursday, the president of the Federal Reserve Bank of Minneapolis, Narayana Kocherlakota, said that it would be "desirable" for the Fed to raise interest rates from their current range near zero by a "modest amount" toward the end of the year.

He's part of a minority at the Fed that has said emergency measures to support the economy should end this year.

In midday trading Friday in New York, the dollar built on recent gains against the euro after its steep 10 percent decline this year. The euro slipped to $1.4498 from $1.4530 late Thursday. It had traded at $1.4942 on Wednesday, its highest level since December 2009.

The dollar rose to 80.56 Japanese yen from 80.19 yen, recovering from a dip below 80 yen that had prompted talk of a possible intervention by Japan to weaken its currency. The dollar hadn't fallen below 80 yen since March 18, when the Group of Seven countries' central banks intervened in foreign exchange markets to weaken the yen following its run-up as an earthquake, tsunami and nuclear crisis shook Japan.

Like the dollar and Swiss franc, the yen is perceived by traders as a safe haven asset and tends to gain during periods of economic or geopolitical stress.

In other trading Friday, the British pound rose to $1.6417 from $1.6379, but the dollar gained to 0.8742 Swiss franc from 0.8704 Swiss franc.

The U.S. currency fell to 96.11 Canadian cents from 96.90 Canadian cents and also declined against the Australian dollar as the jobs report helped trigger a rebound in commodity markets, which had tumbled earlier in the week. Canada and Australia are major exporters of commodities such as wheat, oil and iron ore, and this year's rally in prices for raw materials have also helped drive up their currencies.