Dollar falls on US jobs data

The dollar fell on Friday after data showed the U.S. economy created far fewer jobs than expected, although persistent euro-zone debt problems may limit losses.

Labor Department data showed U.S. non-farm payrolls rose 39,000 last month, much weaker than expectations for 140,000 new jobs. The unemployment rate also increased to 9.8 percent. See.

Many analysts viewed the weak jobs report an outlier amid a slew of generally positive U.S. data released the last few weeks that suggest the economy is slowly gaining traction.

The euro-zone debt crisis remains a drag on the single euro-zone currency and will keep it under pressure for some time. European authorities may have bailed out Ireland, but investors are still worried about the next euro-area country to require assistance.

"A softer-than-expected jobs number probably makes people a little more comfortable with the idea that the Fed will steadily progress with its planned quantitative easing," said Nick Bennenbroek, head of FX strategy at Wells Fargo in New York.

"The question is, was the number so weak that it creates concern about the economy, market volatility and risk aversion? I think probably not. It's a disappointing number, but it's not bad enough to raise concerns of a renewed recession."

In early New York trade, the euro rose 0.9 percent on the day at $1.3342,, blowing past the key 100-day moving average at $1.3325 and well above a 2-1/2 month low of $1.2969 hit on Tuesday.

The next key level to watch is $1.3467, the 38.2 percent retracement of the euro's move from its peak at $1.4283 in early November to the $1.2969-level trough.

The euro was underpinned earlier by the fall in risk premiums on government bonds issued by euro-zone periphery states on Friday, with further bond buying by the European Central Bank reassuring investors.

A rise in euro-zone service sector activity, retail sales and the Bundesbank raising Germany's growth forecasts for this year also supported the single currency.

Against the yen, the dollar fell to 2-1/2-week lows at 82.53. It was last at 82.64, down 1.5 percent.

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