Dollar set for worst week in a month; investors shrug off U.S. jobs data

NEW YORK: The dollar fell to a fresh 2-1/2-year low on Friday, on track for its worst week in a month, as investors shrugged off a U.S. non-farm payrolls report that badly missed expectations in November and focused on a flurry of positive vaccine news.

Upbeat announcements on vaccinations have helped drive a rally in riskier currencies, while actions taken by the Federal Reserve have weakened the greenback.

The euro and Swiss franc, in contrast, were headed for their best week against the dollar in a month.

The single currency touched a new 2-1/2-year high, while the Swiss franc rose to its highest in nearly six years.

Data showed that U.S. non-farm payrolls increased by 245,000 jobs last month after rising by 610,000 in October. That was the smallest gain since the jobs recovery started in May.

But "the vaccines, the restart of talks about stimulus and the new administration, and a less confrontational international background, are still going to be the themes that drive the market," said Marvin Loh, senior global macro strategist, at State Street Global Markets in Boston.

In mid-morning trading, the dollar index fell 0.2% to 90.513, after earlier falling to 90.471, the lowest in more than 2-1/2 years. On the week, the index was down 1.4%, its largest week loss since early November.

"It has been another bad week for the US dollar," analysts at MUFG said in a note. "It will encourage speculators to rebuild short U.S. dollar positions which have been pared in recent months."

The euro has been one of the biggest winners from recent dollar weakness, breaking decisively above $1.20 this week.

The single currency hit a two-and-a-half-year high of $1.2177, just above the previous day's benchmark and was last up 0.1% at $1.2161.

Against the Swiss franc, the dollar continued its descent, dropping to a nearly six-year low of 0.8886 franc.

The greenback was last down 0.2% at 0.8897.

The dollar though gained 0.2% against the yen at 104.02 yen.

Ulas Akincilar, head of trading at the online trading platform, INFINOX, said that despite the weaker-than-expected U.S. employment data, it was a "finely balanced jobs report."

"The calculation is that the slowing jobs market will spur U.S. lawmakers into agreeing a fiscal stimulus to match the Fed's monetary support. And yet the slowdown is not so bad as to send investors running for the hills," he added.

Sterling, meanwhile, rose 0.5% against the dollar to $1.3514 , helped by the greenback's broad weakness. It hit a 2-1/2-year peak versus the greenback on expectations that Britain will be able to clinch a post-Brexit trade deal with the European Union.