Dollar firms on Fed liquidity boost

[img_assist|nid=7114|title=|desc=|link=none|align=left|width=66|height=100]The dollar broadly strengthened on Friday after the government reported fewer job losses in April than expected and the Federal Reserve boosted liquidity to tackle a credit crisis.

At 2100 GMT, the euro traded at $1.5422, down from $1.5462 late Thursday. Earlier it had slid to $1.5360, its lowest level since March 24.

The dollar surged to 105.39 yen from 104.53.

The dollar gained after the Labour Department said US employers cut 20,000 nonfarm jobs in April, far fewer than private economists’ forecasts of 75,000.

The jobless rate fell a tenth of a percentage point to 5.0 per cent, the department said, instead of the expected rise to 5.2 per cent.

While still a weak number, it reinforced the view that the US economy is stabilizing and that the Fed may therefore take a pause in its rate-cutting campaign.

The first positive surprise from nonfarm payrolls this year helps cap a big week for both the US stock market and the dollar on an improved outlook for the US economy, said Michael Woolfolk, senior currency strategist at Bank of New York Mellon.

In addition, the US central bank expanded the scope of collateral it will accept in exchange for credit, and increased its swap agreements with the European Central Bank and Swiss National Bank to boost dollar liquidity.