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Dollar retreats from 4 1/2-year high

Chung Sung-Jun - Getty Images

The dollar slipped on Friday after a solid but below-expectation October U.S. jobs report as investors took some profits on the greenback's months-long rally that has seen it reach multi-year highs in anticipation of tighter U.S. monetary policy next year.

Jobs growth in the United States increased at a fairly brisk pace last month, adding 214,000 non-farm jobs, which was under economists' forecasts for 231,000 new jobs. The unemployment rate dropped to 5.8 percent, a fresh six-year low.

A tightening monetary policy environment in the United States would put the dollar at a yield advantage against its counterparts as investors hunt for better returns.

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Currency markets gyrated after the report, with the euro slipping briefly to a fresh 26-month low before rebounding to a gain of 0.22 percent on the day at $1.24. For the week, however, the euro is down 1 percent, according to Thomson Reuters data.

The euro is plumbing these lows following Thursday's renewed pledge by European Central Bank President Mario Draghi to take the steps necessary to support the struggling euro zone economy.

Draghi said ECB members all stand ready to take more policy action if needed, shrugging off reports of internal rifts over starting such a program.

The dollar fell 0.20 percent below 115 yen, pulling back from Thursday's seven-year peak, according to Thomson Reuters data.

The Bank of Japan's renewed vigor at flooding its economy with cash in order to boost inflation and hopefully economic growth has weighed on the yen. The dollar is up 2.3 percent for the week against the yen.

The U.S. dollar index, measuring the greenback against a basket of currencies, reached a high of 88.19, its best since June 2010 before slipping back to 87.88, a loss of 0.15 percent on the day. However, the index is up 1.1 percent for the week and nearly 12 percent from May.

—By Reuters

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