NEW YORK -- The dollar leapt against the major currencies Friday, regaining some of its losses from this week as jobs data from the U.S. showed a jump in the unemployment rate but indicated a deceleration in layoffs.
Meanwhile, in Germany, the euro zone's largest economy, the central bank issued a sharper forecast of contraction this year and stagnation in 2010 that was more pessimistic than the government's view.
The 16-nation euro dropped to $1.4006 in morning trading Friday from $1.4178 late Thursday, while the British pound fell to $1.6009 from $1.6192.
Last week, the euro closed at $1.4132 and the pound was worth $1.6183 in late trading. The euro spiked as high as $1.4337 this week, its highest level this year, while the pound peaked at $1.6661, a nearly eight-month high.
In late April, the euro had traded under $1.30, while the pound touched below $1.45.
The dollar had slid throughout the spring as improving investor confidence fueled a rally in equities and commodities such as oil and gold. Those investments looked more appealing than cash or super-safe government bonds.
Oil prices moved above $70 a barrel on Friday for the first time since October, and gold prices are moving toward $1,000 an ounce.
The dollar also gained to 97.96 Japanese yen from 96.87 late Thursday.
On Friday, the Labor Department said the unemployment rate in May rose to 9.4 percent from 8.9 percent in April, the highest rate of joblessness in more than a quarter century. But employers cut only 345,000 jobs last month, the fewest of amount of payrolls slashed since September and half of the average monthly cuts for the last six months.
This indicated that while unemployment was still growing, it was growing more slowly.
Some analysts think the correlation between bad news for the U.S. and moves up in dollar may come to an end soon as the U.S. looks increasingly likely to come out of recession first of all the major economies.
"The aggressiveness of the U.S. policy response, coupled with the unprecedented pace that businesses have slashed inventories and fired workers (faster than output has fallen) boosts the chances that the U.S. recovers first," said Marc Chandler, currency analyst at Brown Brothers Harriman in New York. That means good news on the U.S. economy could start propelling the dollar higher, he said.
In Germany, the central bank said on Friday that the economy will shrink 6.2 percent this year and doesn't expect growth in 2010. The German government had forecast in April that Europe's biggest economy would post 0.5 percent growth in 2010 after shrinking 6 percent this year.
On Thursday, the ECB and the Bank of England both left their interest rates on hold at 1 percent and 0.5 percent, respectively, and continued their programs to funnel bursts of money into the economy by buying up bonds.
Higher interest rates can support a currency because investors can get more returns on assets denominated in it.
The Federal Reserve has kept the key U.S. rate at a range from zero to 0.25 percent since December.
In other trading, the dollar rose to 1.0837 Swiss francs from 1.0697 on Thursday, and gained to 1.1116 Canadian dollars from 1.0969.
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