The dollar fell across the board on Friday, hurt by a disappointing US jobs report and little sign that Group of Seven finance ministers were ready to join forces to halt the greenback's two-year decline.
News the US economy created 112,000 new jobs in January, far fewer than the 150,000 the market expected, sent the dollar down more than 1 percent against a range of currencies as investors bet the Federal Reserve would refrain from raising interest rates for some time.
Ultra-low US interest rates have dimmed the appeal of dollar deposits, encouraging capital to flow out of the United States at a time when the country needs to attract growing sums of overseas capital to fund its current account deficit.
"The market was expecting a very loud payrolls number and what it got was well short of that," said Andrew Delano, currency strategist at IDEAGlobal in New York.
"The number has worked against the dollar and pushed the prospect of a US rate hike further out."
The dollar fell more than 1 percent against the euro, Swiss franc and Australian dollar, more than erasing gains made a day earlier after Federal Reserve Board Member Ben Bernanke said he was "pretty confident" the United States would post big job gains soon. By late afternoon in New York, the euro was up 1.3 percent at $1.2700, less than 2 cents away from record peaks scaled in January.
The dollar was 1.4 percent lower against the Swiss franc at 1.2330 francs and 0.3 percent lower at 105.50 yen, moving back within sight of three-year lows hit this week.
With the payrolls release out of the way, traders were focusing on a meeting of world financial leaders in Boca Raton, Florida to see if there would be any attempt to slow the dollar's sharp decline.
French Finance Minister Francis Mer urged the G7 group to issue a clear statement to stabilise currency markets, which have pushed the euro up 40 percent against the dollar in the last two years, jeopardising European exports.
But there was little sign that he would get broad-based support for this stance.
European Central Bank council member Nicholas Garganas said fears the strong euro could strangle euro zone recovery were overdone while Bank of Japan Governor Toshihiko Fukui said it was not possible to address global imbalances with foreign exchange rates alone.
Mer said ministers needed to revise the group's message on currencies since markets had misunderstood their statement at the last G7 gathering in September which called for more flexible currency regimes.
The September communiqué, which was really aimed at Japan and China, which have been buying dollars to keep their currencies weaker for export advantage, only sent the dollar even lower against the euro.
"I'm sure Mer would like the message altered, but whether he will get his way is a different matter," said Lara Rhame, senior economist at Brown Brothers Harriman.
"Europe, Japan and the US all want something different which is probably why it was so vague and unspecific last time."
Marc Chandler, chief currency strategist at HSBC Bank USA in New York agreed.
"If anything, Mer encouraged people to buy euros because the market has a strong conviction that nothing is going to come out of this G7 meeting that is going to arrest the dollar's decline," he said.
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