Dollar keeps surging as European debt worries persist, US economy keeps losing jobs

Dollar keeps surging as jobs, debt worries persist

NEW YORK — The dollar surged Friday to its highest level against the euro since last May as the U.S. lost more jobs in January and amid mounting worries that a debt crisis in Greece was spreading to other European countries.

The 16-nation euro fell below $1.37 for the first time since May 2009, sinking as low as $1.3586 in Friday trading in New York. It fetched $1.3634 in late New York trading, down from $1.3746 late Thursday.

The British pound sank to $1.5602 from $1.5764, bottoming at $1.5560 earlier in the session — its weakest point since May. The dollar gained to 89.24 Japanese yen from 89.18 yen.

The government said Friday that the U.S. unemployment rate dropped to 9.7 percent in January from 10 percent in December, but also reported that employers cut another 20,000 jobs.

The government revised its estimate of job losses, saying the economy has lost 8.4 million jobs since the recession began in December 2007, up from its previous estimate of 7.2 million lost jobs.

But January’s report offers hope that employers may start adding jobs soon. Aside from November’s revised gain of 64,000 jobs, January’s job losses were the smallest since the recession began and are down from the huge loss of 779,000 jobs in January 2009.

This could mean the economy is on the cusp of adding jobs rather than losing them. Economists say it will take at least three years before the job market normalizes, however.

Meanwhile, Americans borrowed less for an 11th consecutive month in December, the Federal Reserve said in an afternoon report. The mixed picture raises hopes that Americans may soon return to spending, a necessary condition for economic recovery.

Stocks traded lower after the report on jobs, while the dollar gained. The safe-haven U.S. currency has tended to get a boost whenever news causes investors to worry that the global economy is worsening. The stock market pulled off its lows in the last hour of trading to end narrowly mixed in an erratic session.

Meanwhile, the euro continued to suffer as concern persisted about debt loads in Portugal, Spain and Greece, which could hinder or derail the eurozone economic recovery.

“Uncertainty about the future of the eurozone, and the loss of credibility that a bailout of Greece would entail, is undermining the euro,” said Capital Economics analyst Julian Jessop.

On Friday, fears for the world economy deepened after the Portuguese parliament defeated a government austerity plan, triggering renewed concern that the financial crisis in that country and in Greece could spread through the eurozone and spill across its borders.

Greek and European officials have denied that there will be a bailout for Greece or any of the European countries with swelling budget deficits.

“Greece provides another very visible — albeit extreme — example of the fiscal pressures that are building in many economies,” said Capital Economics analyst Julian Jessop. The rising cost of insuring bonds against default for other countries, including the U.K. and Japan, is a sign of how nervous investors are about the fragility of the recovery in the global economy.

In other trading Friday, the dollar edged up to 1.0731 Canadian dollars from 1.0718 Canadian dollars after earlier falling on a report that Canada’s unemployment rate fell to 8.3 percent in January as 43,000 part-time jobs were added. The dollar gained to 1.0746 Swiss francs from 1.0656 francs.