The dollar dropped across the board on Tuesday after the delayed jobs report showed weaker than expected U.S. jobs growth in September bolstering expectations that the Fed will be forced to delay plans to start reducing its stimulus program.
The report released by the Department of Labor said the U.S. economy added 148,000 jobs in September, well below expectations for an increase of 180,000. The previous month’s figure was revised up to a gain of 193,000 from a previously reported increase of 169,000.
The unemployment rate ticked down to a four-and-a-half year low of 7.2% from 7.3% in August, but this was mainly due to more people dropping out of the labor force, than finding work.
After the news, the dollar fell sharply against the other major currencies; investors are concerned about the state of the U.S. economy after the government shutdown. With many fearing the Fed will have to maintain its stimulus program at current levels, at least until the beginning of next year.
During the U.S. session, the dollar fell to a 23-month low against the euro, with EUR/USD climbing 0.77% to 1.3785.
In Asia, the dollar traded higher against the yen, with USD/JPY ending the session up 0.12% at 98.06, down from a high of 98.49.
Meanwhile the pound showed little reaction to data released on Tuesday which showed that public sector borrowing in September was lower than expected. The underlying deficit for the first half of the financial year so far stands at £56.7 billion, almost 10% below the same period last year.
But the dollar fell to a two week low against the pound after the release of U.S. NFP data in New York. GBP/USD ended the session up 0.56% to 1.6235.
In Canada, the loonie strengthened against the dollar after official data showed that retail sales rose 0.2% in August, slightly below forecasts for a 0.3% gain. Core retail sales rose 0.4%, better than expectations for a 0.2% increase. USD/CAD fell back 0.16% to 1.0288.
Elsewhere, the greenback was broadly weaker against the Australian and New Zealand dollars, with AUD/USD climbing 0.51% to 0.9706 and NZD/USD rallying 0.71% to 0.8515.