Dollar Falls After Brief Jobs Data Euphoria

The dollar fell Friday as a solid U.S. employment report was not enough to convince investors the U.S. economy is growing fast enough to keep the Federal Reserve from cutting interest rates again.

The greenback rose sharply after the data showed September U.S. jobs growth of 110,000, the highest since May, and upwardly revised numbers for August and July, but the rally petered out ahead of the long Columbus Day holiday weekend.

"Even if you get some better news in terms of the employment report balancing out some of the doomsday scenarios for the U.S. economy, we still have a situation in which the Fed has eased and will likely ease further because of the risks to growth, while other central banks are on hold or tightening policy," said Sophia Drossos, currency strategist with Morgan Stanley in New York.

In late afternoon trading in New York, the dollar index, a gauge of the greenback's value against a basket of major currencies, was down 0.2 percent at 78.324. After the jobs data, the index rose as high as 78.819. On Monday it had dropped to an all-time low of 77.660.

The euro fought back from earlier losses to trade little changed at $1.4140.

But the dollar rose 0.3 percent to 116.85 yen .

CONTINUED : Second-Guessing the Fed

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