(Bloomberg News) The dollar weakened against the euro on speculation the Federal Reserve may introduce another round of asset purchases after a report last week showed U.S. employers added fewer jobs than forecast.
The greenback slumped against higher-yielding currencies, which benefited during the Fed's first two buying programs, known as quantitative easing. The yen declined versus most major peers after rising earlier as Japan returned to a current- account surplus, boosting its haven appeal amid concern the global economic recovery is slowing. The Swiss franc rose beyond the 1.20-per-euro ceiling imposed by the nation's central bank.
"The market is torn between two dominant themes: risk aversion, which is dollar positive, and the fear that last Friday's payrolls numbers could bring back quantitative easing, which is dollar negative," said Boris Schlossberg, director of research at the online currency trader GFT Forex in New York.
The dollar declined 0.3 percent to $1.3133 at 1:19 p.m. New York time after gaining earlier as much as 0.5 percent. The U.S. currency was little changed at 81.64 yen after dropping 0.4 percent earlier. Europe's shared currency appreciated 0.3 percent to 107.22 after falling earlier to 106.12, the weakest level since March 7.
Markets in Australia, New Zealand and the U.K. are closed today for a public holiday.
Nonfarm payrolls increased by 120,000 in March, the least in five months, the Labor Department reported April 6. Economists in a Bloomberg News survey forecast a gain of 205,000.
The Fed has pledged to keep its target lending rate at a record low range of zero to 0.25 percent through at least late 2014. It will hold off on increasing monetary accommodation unless the U.S. economic expansion falters or prices rise at a rate slower than its target, according to minutes of the central bank's March 13 meeting released last week.