Dollar slides after jobs report tops forecast

The dollar slid Friday after a government report on jobs was not as bad as many market watchers had feared, helping assuage fears of another downturn in the U.S.

The better-than-expected jobs report helped boost traders' taste for riskier currencies. The dollar gained against the yen and Swiss franc, which investors are using as safe haven currencies.

"While unemployment remains high, the post Labor Day period begins on firmer footing with prospects of a double-dip off the table for now," said Michael Woolfolk, senior currency strategist at the Bank of New Mellon.

When seemingly stronger economic data or corporate developments help reassure investors about the economy, they tend to buy up currencies of emerging economies, countries with big commodity production and others where interest rates are higher than in the U.S.

In late trading in New York, the euro rose to $1.2882 from $1.2812. The British pound rose to $1.5449 from $1.5389.

The biggest gainer among heavily traded currencies was Canada, which as the U.S.' top trading partner has an economy that is closely tied to that of its neighbor. The dollar tumbled to 1.0394 Canadian dollars from 1.0544 Canadian dollars.

Other countries that, like Canada, produce a lot of raw materials, also gained versus the dollar, including the Australian and New Zealand dollars and the Brazilian real.

The U.S. currency gained versus the Swiss franc and Japanese yen, two currencies that traders have favored more than the dollar recently when they have felt worried about data that suggests the global economic rebound is waning.

The dollar edged up to 84.43 yen from 84.23 yen late Thursday, and gained to 1.0186 Swiss francs from 1.0146 Swiss francs. Still, the dollar isn't far off from a 15-year low versus the yen hit last week at 83.61 yen. The dollar is also hovering above its lowest point this year of 1.0066 francs from Wednesday.

Driving trading Friday was a monthly Labor Department report saying that private employers added a modest 67,000 jobs to payrolls in August and revised higher data from June and July.

Economists polled by Thomson Reuters had forecast a smaller gain of 41,000 jobs.

While private companies added positions more than they cut workers, the economy overall lost 54,000 jobs as the government cut temporary census positions. The unemployment rate rose to 9.6 percent last month from 9.5 percent in July as unemployed people who had been to discouraged to look for work resumed their job hunts. The government counts only people actively seeking work in the jobless rate.

The report was better than expected, but millions people remain unemployed while employers are slow to hire. While Friday's data "may reduce a sense of urgency for the Fed to do something, if we continue to see report like today's through the end of the year, the Fed is not going to sit idle," said Bank of America Merrill Lynch economist Neil Dutta in a research note.

Federal Reserve Chairman Ben Bernanke has said that the central bank would consider more steps to boost the economy if conditions deteriorated. Such steps, which would likely bring down interest rates even more, would make the dollar less attractive for investors who want bigger returns on their bets.