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Weak U.S. Jobs Data Drags Dollar Down

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The U.S. dollar fell against its major counterparts in the New York session on Friday, as a sharp slowdown in the nation's job growth in December renewed concerns about the strength of the labor market.

Data from the Labor Department showed that U.S. employment increased much less than expected in the month of December.

The report said non-farm payroll employment rose by 199,000 jobs in December after climbing by an upwardly revised 249,000 jobs in November.

Economists had expected employment to jump by 400,000 jobs compared to the addition of 210,000 jobs originally reported for the previous month.

The unemployment rate slid to 3.9 percent in December from 4.2 percent in November. The unemployment rate was expected to edge down to 4.1 percent.

The data is unlikely to change the Federal Reserve's path towards a faster tightening of monetary policy.

St. Louis Fed President James Bullard said on Thursday that the central bank is likely to begin raising rates in the March meeting to control inflation.

Bullard downplayed risks from the Omicron variant, saying that he expects growth "at an above-trend rate" due to fiscal and monetary support.

The greenback was down against the pound, at a 2-day low of 1.3572. The pound-greenback pair had ended yesterday's trading session at 1.3529. Further fall in the currency may challenge support around the 1.37 level.

Survey results from the Lloyds Bank subsidiary Halifax and IHS Markit showed that UK house price inflation accelerated sharply at the end of 2021, but the pace is set to slow this year amid expectations of further interest rate hikes and increasing pressures on household budgets

The house price index rose 9.8 percent year-on-year following an 8.2 percent increase in November. The latest house price inflation figure was the highest since July 2007.

The greenback touched a 2-day low of 1.1341 against the euro, down from Thursday's close of 1.1295. Should the greenback falls further, it is likely to test support around the 1.16 region.

Data from Destatis showed that German industrial production declined unexpectedly in November.

Industrial output dropped 0.2 percent month-on-month in November, reversing a 2.4 percent rise in October. Economists had forecast production to climb 1 percent.

The greenback edged down to 115.64 against the yen, after a rise to 116.05 at 7:45 pm ET. The pair had closed Thursday deals at 115.82. Immediate support for the currency is likely seen around the 112.00 level.

Data from the Ministry of Internal Affairs and Communication showed that Japan household spending fell 1.2 percent on month in November - coming in at 277,029 yen.

That was well shy of expectations for an increase of 1.2 percent following the 3.4 percent gain in October.

The greenback pulled back to 0.9204 against the franc, after touching 0.9232 at 8:40 am ET, its highest level since December 22. At yesterday's trading close, the pair was quoted at 0.9210. The dollar is seen finding support around the 0.90 region.

The greenback weakened to a 3-day low of 1.2670 against the loonie from yesterday's close of 1.2725. Next key support for the currency is likely seen around the 1.24 level.

The greenback retreated to 0.6768 against the kiwi and 0.7174 versus the aussie, off its prior high of 0.6735 and a fresh 2-week high of 0.7130, respectively. The greenback was worth 0.6745 against the kiwi and 0.7161 versus the aussie at Thursday's New York session close. The next possible support for the greenback is seen around 0.69 against the kiwi and 0.74 versus the aussie.

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