October 4, 2019 / 6:09 PM / 5 months ago

FOREX-Dollar slips as U.S. jobs-inspired rally fizzles

    * U.S. jobs weaker than expected, but solid overall
    * Rate futures pare bets on Fed easing at two upcoming meetings
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Recasts, adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 4 (Reuters) - The dollar slipped on Friday after earlier posting gains following a U.S.
jobs report that underperformed expectations but was solid overall, as investors remained cautious about
political risk in the United States and ongoing trade negotiations with China. 
    The greenback hit session highs against the yen and euro following the jobs report, after trading
lower for most of the session. But by afternoon trading, the dollar's rally faded.
    Data showed that U.S. nonfarm payrolls increased by 136,000 jobs last month. August data was revised
to show 168,000 jobs created instead of the previously reported 130,000 positions. Economists polled by
Reuters had forecast payrolls would increase by 145,000 jobs in September.
    The unemployment rate dropped to a near 50-year low of 3.5%.
    "Given that market expectations have shifted after the ADP (private payrolls) and ISM (manufacturing
and services), people were bracing for something worse than this. So this is in the ballpark of what is
acceptable," said Shaun Osborne, chief market strategist, at Scotiabank in Toronto.
    "But there are other issues here for the dollar aside from the Fed easing, such as the U.S. political
backdrop. And we're still looking at the funding tightness issue," he added.
    A drop in U.S. unemployment in September pushed traders of U.S. short-term interest rate futures on
Friday to pare bets the Federal Reserve will cut rates at both of its two upcoming meetings.
    The jobs data was initially a big relief to dollar bulls after two weak reports this week that
heightened U.S. recession fears. 
    On Thursday, a survey from the U.S. Institute for Supply Management (ISM) showed its non-manufacturing
activity index falling to 52.6 in September, the lowest since August 2016.
    The non-manufacturing data came on the heels of ISM's manufacturing survey on Tuesday that showed
activity plunging to more than 10-year lows.
    The jobs report impact, however, was short-lived as investors grappled with U.S. political tensions.
    Diplomatic texts released late Thursday showed that U.S. officials pressured their Ukrainian
counterparts to launch investigations that could benefit President Donald Trump's personal political
agenda in exchange for a meeting between the two countries' leaders.
    The exchanges were released by Democrats in the House of Representatives as part of an impeachment
investigation to determine whether Trump pressed Ukraine to probe former Vice President Joe Biden and his
son, Hunter Biden, in connection with Ukrainian gas company Burisma.
    Trade talks with China were also in focus, with both U.S. and Chinese officials set to meet next week.

    In early afternoon trading, the dollar index was down 0.1% at 98.805, slipping against the yen
to 106.82 yen.
    The euro gained 0.2% versus the dollar to $1.0982.
    Currency bid prices at 1:46 PM (1746 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.0983        $1.0964     +0.17%         -4.24%      +1.0997     +1.0958
 Dollar/Yen       JPY=        106.8100       106.9000    -0.08%         -3.13%      +107.1200   +106.6000
 Euro/Yen         EURJPY=     117.33         117.20      +0.11%         -7.04%      +117.4800   +117.0900
 Dollar/Swiss     CHF=        0.9946         0.9991      -0.45%         +1.35%      +1.0007     +0.9930
 Sterling/Dollar  GBP=        1.2331         1.2328      +0.02%         -3.34%      +1.2356     +1.2277
 Dollar/Canadian  CAD=        1.3324         1.3335      -0.08%         -2.30%      +1.3339     +1.3299
 Australian/Doll  AUD=        0.6773         0.6741      +0.47%         -3.92%      +0.6773     +0.6739
 Euro/Swiss       EURCHF=     1.0927         1.0951      -0.22%         -2.91%      +1.0977     +1.0910
 Euro/Sterling    EURGBP=     0.8905         0.8889      +0.18%         -0.88%      +0.8936     +0.8881
 NZ               NZD=        0.6319         0.6300      +0.30%         -5.93%      +0.6336     +0.6297
 Dollar/Norway    NOK=        9.0891         9.1234      -0.38%         +5.21%      +9.1328     +9.0906
 Euro/Norway      EURNOK=     9.9840         10.0084     -0.24%         +0.79%      +10.0195    +9.9769
 Dollar/Sweden    SEK=        9.8374         9.8683      -0.12%         +9.75%      +9.8720     +9.8315
 Euro/Sweden      EURSEK=     10.8078        10.8205     -0.12%         +5.30%      +10.8247    +10.7966
 (Reporting by Saikat Chatterjee; Editing by Bernadette Baum)
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