Dollar Drops As U.S. Job Growth Moderates

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The U.S. dollar fell against its major counterparts in the European session on Friday, as a moderation in the pace of U.S. job growth and a spike in the unemployment rate in August helped ease inflation worries and trimmed expectations of a 75 basis point hike from the Federal Reserve at its meeting later this month.

Data from the Labor Department showed that non-farm payroll employment rose by 315,000 jobs in August after surging by a revised 526,000 jobs in July.

Economists had expected employment to increase by about 300,000 jobs compared to the jump of 528,000 jobs originally reported for the previous month.

The unemployment rate edged up to 3.7 percent in August from 3.5 percent in July. Economists had expected the unemployment rate to remain unchanged.

U.S. treasury yields dropped, with the benchmark yield on 10-year note touching 3.221 percent. Yields move inversely to bond prices.

Expectations for a 75 basis point rate hike have reduced to 62 percent following the report.

The currency showed mixed performance against its major counterparts in the Asian session. While it rose against the yen, it held steady against the franc and the pound. Against the euro, it declined.

The greenback was down by 0.6 percent against the euro, at 1.0030. The pair had closed Thursday's deals at 0.9945. Next key support for the greenback is likely seen around the 1.02 level.

The greenback pulled back to 139.95 against the yen, from a 24-year high of 140.80 it logged at 8:45 am ET. The pair was worth 140.20 when it ended deals on Thursday. The greenback is likely to challenge support around the 118.00 region, if it drops again.

The USD/CHF pair retreated to 0.9784, after a rise to 0.9859 at 8:45 am ET. At Thursday's close, the pair was valued at 0.9811. Further drop in the currency may challenge support around the 0.94 region.

After a brief rise, the greenback fell back against the pound, with the pair trading at 1.1580. The pound-greenback pair had finished yesterday's trading session at 1.1545. Immediate support for the dollar is likely seen around the 1.22 level.

The USD/CAD pair dropped 0.4 percent to a 2-day low of 1.3101. The greenback was trading at 1.3155 per loonie at yesterday's close. Should the greenback falls further, it is likely to face support around the 1.26 region.

The greenback lost 0.7 percent against the aussie, touching a 2-day low of 0.6850. The aussie-greenback pair was worth 0.6786 at Thursday's close. The greenback is seen facing support around the 0.72 level.

After climbing to more than a 2-year high of 0.6050 at 12:45 am ET, the greenback turned lower against the kiwi and fell to a a 2-day low of 0.6133. At yesterday's trading close, the pair was quoted at 0.6079. Continuation of the greenback's downtrend may lead it to a support around the 0.64 region.

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