Dollar rises after jobs data
Investors flock to safety as bonds rise and stocks fall after dismal report raises concerns about the economic recovery.
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NEW YORK (Reuters) -- The dollar rose against major currencies Thursday after bleak U.S. jobs data renewed concerns about the economy and enhanced the greenback's safe-haven appeal.
U.S. Treasury bonds rose and stocks fell more than 2% after a government report showed U.S. employers cut 467,000 jobs in June, far more than expected, while the unemployment rate rose to 9.5%.
The data raised some risk aversion, which also pushed the yen higher and drove down higher-yielding, commodity-linked currencies like the Australian and New Zealand dollars.
"(The jobs data) has raised a doubt for a lot of traders in the market about the recovery," said Kathy Lien, director of currency research at GFT Forex in New York.
"At this point, traders and investors will probably need some really good news before they can be convinced to buy stocks and sell dollars once again."
In late New York trading, the ICE Futures U.S. Dollar Index, which tracks the value of the greenback against a basket of currencies, rose 0.8% to 80.269.
The euro was down 1.1% at $1.4002, retreating from $1.4201 hit on Wednesday, its highest since early June.
"The weak jobs report reinforced a trend already in place in the forex market prior to the release, that is, that the dollar was oversold," said Camilla Sutton, a currency strategist at Scotia Capital, in Toronto.
"Euro/dollar has been stuck in a range and with weak data like today's, the euro will not get the support to break through $1.42," she added.
Adding to pressure on the euro were comments from the European Central Bank President Jean-Claude Trichet that euro-zone activity would likely remain weak for the rest of the year. The ECB left its benchmark refinancing interest rate at a record low of 1%, as expected.
The dollar slipped 0.8% to ¥95.85, after trading as high as ¥96.89 before the jobs report.
Volume was light ahead of the three-day weekend for the Independence Day holiday in the United States. Financial markets will be closed on Friday and will re-open on Monday.
The dollar also benefited from a Chinese Foreign Ministry official's comments, which dampened speculation about diversification of currency reserves.
On Wednesday, the U.S. currency fell to a three-week low against the euro after G8 sources told Reuters that China had asked for a debate on proposals for a new global reserve currency at next week's Group of Eight summit in Italy.
On Thursday, Vice Foreign Minister He Yafei said it would be "normal" for the issue to be raised at next week's meeting, but he had not heard that Beijing had requested such a discussion.
"The dollar has been a little bit underpinned by the Chinese policy-makers taking back their rhetoric about the global reserve currency," said Samarjit Shankar, director of global foreign exchange strategy at the Bank of New York Mellon, in Boston.
In other currency trading, the Swedish crown tumbled after Sweden's central bank surprised markets by cutting its key repo rate by 25 basis points to 0.25% on Thursday. The euro rose 1.6% on the day to 10.893 crowns, Reuters data showed
The Swiss franc hit the day's low of 1.5257 per euro from around 1.52 after a Swiss National Bank official said the central bank was prepared to continue interventions to stem the domestic currency's strength.
"Central banks across the globe are becoming increasingly more vocal about sharp gains in their currencies," said Scotia Capital's Sutton. "Their participation in the forex markets is likely to increase." 
