Dollar retreats on dismal economic news
The greenback lost traction against major currencies as a handful of disappointing jobs reports signal the U.S. economy is far from in recovery.
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NEW YORK (CNNMoney.com) -- The dollar retreated against major currencies Wednesday as two weak jobs reports showed that the already battered U.S. labor market wasn't getting better.
The reports were a harbinger of a dismal government unemployment report due out Friday, further underscoring the recession.
The ADP report "is pushing the dollar lower because it is negative for the overall economy," said Tom Benfer, Director, Foreign Exchange at BMO Capital Markets.
At 3:25 p.m. ET, the 15-nation euro was up 0.64% against the dollar, trading at $1.3623, from $1.3537 late Tuesday.
Meanwhile, the British pound surged against the dollar, rising 1.31% to $1.5114 from $1.4919. And the greenback dropped 1.14% against the Japanese yen, purchasing ¥92.59 down from ¥93.65.
On Tuesday, the dollar rose after dour economic news from the euro zone raised expectations that the European Central Bank would be pressured to cut its key interest rate at its meeting next week.
The Bank of England is scheduled to make its monetary policy announcement Thursday.
While investors were focusing on the dismal job reports Wednesday, there is a silver lining for the greenback longer term.
"The perception is that there is going to be a very massive stimulus package once Mr. Obama gets into office," said Benfer. "I think you are going to see a continued strong dollar this year as the pieces are put in place to stimulate the U.S. economy."
Labor woes. The ADP National Employment Report, which is calculated based on payroll data, reported that the private sector shed 693,000 jobs on a seasonally adjusted basis in December. That was more than the 476,000 private-sector jobs lost in November, according to the payroll-processing company.
The number of announced job cuts in December fell 8.4% from a month earlier, but was nearly four times the total of the same month in 2007, according to a report released from the outplacement firm Challenger, Gray and Christmas. Challenger said the 166,348 announced job cuts were the most for the last month of the year since the company began compiling data in 1993.
And the Labor Department is expected to show a loss of 475,000 jobs in December, down from the 533,000 reported for November, according to a consensus estimate of economists complied by Briefing.com. The unemployment rate is forecasted to rise to 7% from 6.7%.
"In the near term perception, the day traders are looking at this as a negative for the U.S. economy, but it is just one day's worth of trading," said Benfer.
Benfer also said, however, that because a lot of U.S. companies depend on revenue from overseas companies, the full recovery of the domestic economy would depend on the global economy recovering. 
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