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NEW YORK (MarketWatch) — The dollar rose against other major currencies on Friday, reversing losses sparked by a government report showing the U.S. economy created fewer-than-expected jobs last month.

Nonfarm payrolls expanded by 111,000 in January, the Labor Department said. The unemployment rate rose to 4.6% from 4.5% in the previous month. The increase in payrolls was below the 170,000 expected by economists surveyed by MarketWatch. The unemployment rate had been expected to hold steady at 4.5%.

Average hourly earnings increased 3 cents, or 0.2% to $17.09, the Labor Department said. Economists had been expecting a 0.3% gain. Payroll growth in the fourth quarter was stronger than expected. The government raised its estimate of job growth in the October-December quarter by a net 104,000 jobs.

“The January jobs report is a little weaker on the headline basis, but averaged out with the revision to December [payrolls], the labor market still appears to be quite solid,” said Brian Dolan, director of research at Forex.com, a division of Gain Capital. “All in all, not a bad jobs report, but mildly softer than the market had expected.”

In New York trading, the euro stood at $1.2951, compared with $1.3018 late Thursday. The dollar was quoted at 121.08 yen, compared with 120.71 yen.

The British pound traded at $1.9661, compared with $1.9669. The dollar changed hands at 1.2484 Swiss francs, compared with 1.2436 francs.

The euro fetched 156.85 yen, compared with 157.15 yen.

Meg Browne, currency strategist at Brown Brothers Harriman, said the dollar reversed course after failing to break the upside resistance level for the euro.

What’s more, while the payrolls data are generally on the weak side, they aren’t “the end of the world. It just isn’t quite as strong as everyone thought in January,” she said. “It doesn’t change interest-rate expectations that the Fed will be on hold for a while.”

Consumer sentiment inches lower

Separately, consumer sentiment weakened slightly in late January, according to research at the University of Michigan on Friday. The UMich consumer sentiment index inched lower to 96.9 in late January from 98.0 earlier in the month. The decline was unexpected. Economists were expecting the index to remain steady at 98.0.

Elsewhere, the Commerce Department said orders for U.S.-made factory goods rose by 2.4% in December, against expectations of an increase of 2%.

The yen fell after U.S. Treasury Secretary Henry Paulson said he was comfortable with the value of the yen being set by markets, according to Ashraf Laidi, chief foreign-exchange strategist at CMC Markets in New York.

This reduced speculation of “any U.S.-imposed pressure on Japan to allow a firming of its currency” at the meeting of Group of Seven finance ministers Feb. 9-10 in Germany, Laidi said.


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