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The dollar fell to its lowest level in more than two months on Friday after US employment data for April fell well below expectations, dampening hopes that a rapid economic recovery would soon lead to higher interest rates.
The number of non-farm workers rose just 266,000 last month after rising 770,000 in March, the Labor Department said in its closely watched employment report on Friday. Economists polled by Reuters had forecast that the number of employees would rise by 978,000.
The dollar fell 0.34% against a basket of major currencies to 90.561 after falling to 90.338 according to the data, its lowest level since February 26.
“The dollar is really getting beaten up this morning,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.
“The number has been so mixed that I think market expectation of super high interest rates and pressures on inflation will fall by the wayside, and that obviously means more liquidity from the Fed,” he said.
It also means US interest rates will remain at extremely low levels for quite a while, and that will keep pressure on the dollar, added Schlossberg.
The euro rose 0.44% against the greenback to $ 1.21140 and the pound sterling 0.3% to $ 1.3933.
“This is just a report, but it is changing the way many traders think about how this rebound is headed,” said Edward Moya, senior market analyst at FX broker OANDA in New York.
Elsewhere, China’s exports accelerated unexpectedly in April and import growth hit a decade high, which helped propel yuan and Asian stocks higher.
China’s yuan was at more than two-month highs against the dollar, which saw its longest weekly streak since September thanks to strong trading data and the weaker dollar.
The MSCI Emerging Market Currency Index hit a record high of 1732.79 on Friday, boosted by gains in the Chinese yuan. Monex Europe’s Harvey said emerging market currencies also benefited from the “commodity super cycle”.
The Canadian dollar rose 0.27% to 1.2185 against the US dollar after hitting its strongest level in more than three years on Thursday.
The Australian dollar rose 0.19% against the US dollar to 0.77995, making up for losses from previous sessions.
The Aussie was helped by a strong price rally from Australia’s top export earner iron ore.
“We anticipate that AUD, CAD and NOK will continue to be well supported amid continued bullish positive optimism about global growth,” MUFG’s chief research officer Derek Halpenny wrote in a note.
In cryptocurrencies, ether rose 0.51% to $ 3,507.92 after hitting an all-time high on Thursday.
Bitcoin rose 1.4% to $ 57,237.60.