The dollar fell against major currencies including the yen and euro on Friday after data showed US employment unexpectedly declined in July, raising concerns about the economy and how the Federal Reserve may respond with interest rates.
The US economy lost 23,000 jobs in July, Labor Department data showed, compared with economists' expectations for an increase of 80,000 jobs in a Reuters poll.
Data also showed that the US unemployment rate fell to 4.1% last month, pushing the labour participation rate to a near 5-1/2-year low of 61.4%.
The dollar weakened against the yen after the report, shedding gains made in recent days in the aftermath of a historic intervention last week between Japanese and US authorities, which had pushed it to a 13-week low.
It was last down 0.52% to 157.62 yen.
"The big drop that we saw this morning is almost wholly related to the US employment report for July because I think no one really expected non-farm payrolls to be negative or that there would be a big downward revision in the June numbers," said Thierry Wizman, global FX and rates strategist at Macquarie Group.
"I'm inclined to think that the market has shifted the Fed hike into October or December instead of September. That's the main reason for the dollar's decline. The market thinks that the Federal Reserve is going to take into account how tight the labour market is.
So anytime you see a print that suggests the US economy is weak or that the labor market is not as strong as otherwise thought, they effectively push out the prospect of a Fed rate hike."
US Treasury yields fell sharply following the report. The 2-year note yield, which typically moves in step with Fed rate expectations, fell 5.19 basis points to 4.193%. The yield on benchmark US 10-year notes fell 2.67 basis points to 4.643%.
Markets are now pricing in a nearly 56% chance that the Fed will hold rates in September, up from 45% a day earlier, according to the CME's FedWatch tool.
The euro was last up 0.31% against the dollar at $1.1559.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.46% to 99.49.
Gold rose as the US dollar fell. Spot gold rose 2.28% to $4,336.09 an ounce.
