By Sara Sjolin, MarketWatch , Ryan Vlastelica and Hiroyuki Kachi
Fewer jobs added in December than expected
The dollar strengthened against its major rivals on Friday, clawing back some of its recent losses following a weaker-than-expected read on the labor market.
The U.S. added 156,000 jobs in December (http://www.marketwatch.com/story/us-adds-156000-jobs-in-december-2017-01-06-81033418), according to the closely watched payrolls report, below the 180,000 that had been expected, while the unemployment rate rose to 4.7% from 4.6%. In separate reports, factory orders fell 2.4% in November while orders for durable goods (http://www.marketwatch.com/story/factory-orders-tumble-24-in-november-2017-01-06) lost 4.5%.
Trading in currencies was volatile following the release of the data, echoing some of the sharp moves the currency has seen over the past several weeks. On Thursday, it suffered its biggest one-day drop since July 2016, while sharp gains over the past few months have pushed it to multiyear highs.
"The dollar has sold off quite a long ways this week, which means it is less vulnerable to disappointing news, which the jobs number obviously is, but there's not enough here for bulls or bears to get carried away," said Jane Foley, senior currency strategist at Rabobank. Foley said the number painted "a mixed message" on the economy, citing the disappointing headline jobs figure, but also the stronger-than-expected read on average wages.
The ICE Dollar Index added 0.5% to 102.04, trading near its highs of the session. For the week, it is down 0.2%, with much of that coming from a 1.1% slump (http://www.marketwatch.com/story/dollar-slides-again-on-feds-considerable-uncertainty-about-trump-future-2017-01-05) on Thursday. That drop came as market participants seem to have off-loaded their bets on a higher greenback after dovish minutes from the Federal Reserve (http://www.marketwatch.com/story/interest-rate-hikes-might-come-at-faster-pace---fed-minutes-show-2017-01-04). The slump also came as a few foreign central banks, including those in Mexico and China, sought to stem steep declines in their own currencies by selling U.S. dollars.
Still, it has seen particular strength since the November election in the U.S., with investors betting that President-elect Donald Trump will push for policies that both accelerate economic growth and stoke inflation. Over the past three months, the index is up 5.5%, and it has been trading near levels last seen in 2002.
Against the yen, the greenback was trading at Yen116.88, compared with Yen115.34 late Thursday in New York, a move of 1.2%.
The euroweakened to $1.0553 from $1.0598 late Thursday while the pound fell to $1.2309 from $1.2413 late Thursday in New York. The U.K. currency was trading near its low of the session, and continues to hover near multidecade lows, as it has since the country voted to leave the European Union in June 2016.
Bucking the trend was the Canadian dollar , which edged up against its U.S. equivalent, trading at C$1.3225 from C$1.3233. The country added 54,000 jobs in December, far more than had been expected.
China guided the yuan (http://www.marketwatch.com/story/yuan-rises-by-the-most-since-2005-in-daily-fixing-2017-01-06) 0.9% stronger against the U.S. dollar on Friday, its biggest increase since 2005. At the same time, the overnight yuan borrowing cost jumped above 60%, the latest signs that Chinese authorities are fighting to control the yuan's descent.
Read:Will surging Chinese yuan wreck the dollar rally? (http://www.marketwatch.com/story/will-surging-chinese-yuan-wreck-the-dollar-rally-2017-01-05)
The yuan fell 0.4% from Thursday's close to 6.9182 to the dollar in Asian trade on Friday. On Wednesday and Thursday in the offshore market, the yuan surged 2.5% against the dollar.
(END) Dow Jones Newswires
January 06, 2017 12:14 ET (17:14 GMT)
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