Weaker than expected US jobs data sent the dollar close to a four month low against the euro on Friday as markets increasingly bet on a third round of stimulus.

The euro surged to a high of $1.2814 against the dollar before later trading at around $1.2811, an increase of nearly 1.5 per cent. On the week, the euro gained 1.8 per cent.

The dollar index, which measures the greenback against a basket of six currencies, declined to 80.182 from 81.088 on Thursday. The index registered a weekly loss of 1.3%.

The widely anticipated US jobs data failed to provide investors with any cheer. Figures from the Labor Department showed only 96,000 new jobs were added, missing market estimates of around 125,000. August's figure was also well below July's figure of 141,000. The report also said the unemployment rate fell to 8.1%.

The poor August jobs data is the latest in a long line of weak US economic data. Friday's report underlined that any third quarter recovery has failed to materialised and instead markets are increasing expecting that the Fed will take action to stimulate growth by rolling out a third round of quantitative easing.

Analysts also increasingly expect the Fed will further extend its close to zero interest rate policy to 2015.

The gloomy jobs data gave the Japanese yen a boost against the dollar. It traded 0.8% higher at ¥78.24. For the week the yen lost 0.2%.

Sterling climbed to $1.6004 from $1.5926 late the previous session while the Australian dollar advanced to $1.0397 after the nation's July trade deficit came in worse than expected.



CJ

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