Dollar slumps after US jobs report disappoints

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The dollar slumped on Friday, stung by a September U.S. jobs report depicting slower hiring, which raised doubts the economy was strong enough for the Federal Reserve to raise U.S. interest rates this year as had been widely anticipated.

Losses for the dollar against the euro and topped 1 percent, and the dollar index was 0.66 percent after touching a low last seen on Sept. 24.

The common currency last traded up 0.16 percent at $1.1208.

Payrolls outside of farming rose by 142,000 last month and August figures were revised sharply lower to show only 136,000 jobs added in August, the Labor Department said on Friday. Economists had expected employers to have added 203,000 jobs in September, according to a Reuters poll.

The data marked the smallest two-month gain in employment in over a year and could fuel fears that a China-led global economic slowdown may sap America's strength.

Behind the rise in dollar-yen

"This is a weak report that will probably push back the timing of the Fed rate hike to 2016," said Vassili Serebriakov, currency strategist at BNP Paribas, New York. "The dollar will suffer the most against the yen in the short term, although not really against commodity currencies because I would imagine this data would be negative for risk sentiment."

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The dollar fell sharply two weeks ago after the Fed once again kept rates at historic lows. But the currency had gained around 2.5 percent through Friday, as Fed Chair Janet Yellen and other U.S. policymakers kept alive the prospect later this year of a rate rise, which would be the first in nearly a decade.

The dollar on Friday hit a three-week low against the yen below 119 yen but was last 0.15 percent at 120.03 yen. Against the Swiss franc, the dollar was off 0.49 percent.