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Dollar falls as jobless rate rises to highest since September

The dollar declined against the euro after a US government report showed a decline in job creation last month and a boost in the unemployment rate to the highest since September.

The US currency is headed for a weekly loss against the euro after the Fed said on January 31 that readings on inflation excluding energy prices have „improved modestly,” suggesting policy makers are less likely to switch to a tightening bias regarding borrowing costs. The central bank left the US benchmark interest rate on hold this week at 5.25%. „Traders initially sold off the dollar because the headline number is well below the expectation,” said David Powell, currency strategist at research firm IDEAglobal in New York. The US currency traded at ¥120.92 at 8:57 a.m. in New York from 120.82 yesterday. The dollar traded at $1.3046 per euro from $1.3022. The yen traded at 157.75 per euro from 157.32.

The number of nonfarm workers added to payrolls in January was 111,000, after a revised gain of 206,000 in December, the Labor Department said today in Washington. That compared with a forecast of 150,000 jobs in a Bloomberg survey of 82 economists. The unemployment rate rose to 4.6% from 4.5% in December. Workers' average hourly earnings rose 0.2% in January, compared with the median forecast of 0.3% in a Bloomberg survey. BNP Paribas SA, Deutsche Bank AG and Standard Chartered Plc are sticking to forecasts that the dollar will weaken versus the euro by March 31. They held their view even after the US currency strengthened against 14 of 16 major currencies this year as speculation cooled the Fed will cut interest rates. Deutsche, Germany's biggest bank, predicts a dollar decline to $1.33 versus the euro by the end of March. BNP, the biggest French bank, says the dollar will fall to $1.35. Standard Chartered predicts the US currency will drop to a record $1.38. (Bloomberg)