NEW YORK (Reuters) – The U.S. dollar bounced on Friday after U.S. job growth for July helped ease some investor worries on the U.S. labor market, but the currency logged a seventh straight week of declines.
The U.S. Labor Department’s report showed nonfarm payrolls increased by 1.76 million in July. While that was more than the 1.6 million economists surveyed by Reuters had forecast, it was still sharply lower than the record 4.8 million in June.
“The employment report allayed the market’s downside job fears, allowing the Dollar to rally broadly through the N.Y. session,” Ron Simpson, director of currency research at Action Economics in Tampa, Florida, wrote in a note following the data.
The dollar index, which measures the greenback against a basket of currencies, rose in the wake of the report and hit its highest in three days. It was last up 0.6% at 93.410 <=USD>.
The U.S. dollar index’s rebound on Friday may not signal an end to its recent weakness, some analysts said.
Despite Friday’s gains, the dollar index, which hit a two-year low on Thursday, was on pace to finish the week down 0.05%. That is its seventh straight weekly loss, the longest such streak in a decade.
“One month’s survey isn’t going to be enough to meaningfully arrest the fall in the dollar,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Investors also kept an eye on ongoing stimulus talks in Washington.
U.S. Republicans and Democrats have so far failed to reach an agreement on the cost of fiscal stimulus measures that many investors say is necessary to prevent the economy from losing more momentum.
The euro has retreated from recent highs, and was last down 0.8% at $1.1785 <EUR=EBS>, while the British pound fell 0.7% to $1.3057 <GBP=D3>.
The risk-sensitive Australian dollar fell on concerns about worsening U.S.-Chinese relations and the Reserve Bank of Australia’s downbeat assessment of the local economy. It was last down 1.1% at 0.7157 <AUD=D3>.
The dollar is at its most oversold level in over 40 years, investment bank Morgan Stanley said on Friday, adding it had now shifted from its dollar-bearish stance and turned “tactically neutral” on the U.S. currency.
Speculators raised their net short dollar positions in the latest week, data on Friday showed.
(Reporting by Caroline Valetkevitch; additional reporting by Saqib Iqbal Ahmed and Olga Cotaga; editing by Emelia Sithole-Matarise, Jane Merriman, Dan Grebler and Richard Chang)