Dollar drifts lower vs. euro, yen firms

Frankfurt-Germany (Jan 14)   The dollar slipped slightly against the euro Monday as traders continued to digest an unexpectedly weak US jobs report that raised speculation the Federal Reserve will slow stimulus cuts.

In lacklustre trade, the euro bought US$1.3670 around 2200 GMT, up from US$1.3663 at the same time Friday.

The yen made solid gains. The dollar dropped sharply against the Japanese currency, trading at 102.98 yen compared with 104.10 yen Friday. The euro fell to 140.77 yen from 142.32.

"Effects of the much weaker-than-expected jobs report from Friday seem to be lingering," said Zachary Griffiths, economic analyst at Wells Fargo Economics.

The greenback extended sharp losses after data Friday from the US Labor Department showed the economy added a mere 74,000 jobs in December, well below the consensus estimate of 197,000.

The Fed said it plans to cut its massive stimulus this month, by US$10 billion to US$75 billion in asset purchases, because of signs of improvement in the economy.

"Following the weak jobs report, our expectation is for the greenback to be on the defensive for the near-term, and this sentiment could be extended if we were to get any additional weak economic figures leading up to the next Fed meeting," Griffiths said.

Some analysts said the poor jobs data would encourage the Fed to hold off further cuts in bond purchases at its January 28-29 monetary policy meeting.

The dollar slipped to 0.8991 Swiss franc from 0.9020 Friday.

But it gained against the British currency, pushing the pound down to US$1.6367 from US$1.6480.