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NEW YORK (Dow Jones)--The euro gained to session highs against the dollar and yen Friday morning after U.S. stocks opened strong and the appetite for risk grew.

The Dow Jones Industrial Average was recently up more than 80 points on the day, discounting a disappointing U.S. jobs report and focusing instead on a potential economic stimulus package ahead of a press conference scheduled for next week by new Treasury Secretary Timothy Geithner.

"There is little doubt that the U.S. non-farm payrolls report was extremely weak," said Vassili Serebriakov, a currency strategist at Wells Fargo Bank in New York. "Over the past few days the foreign exchange market has tried to lean on positive developments - better-than-expected Purchasing Managers Index numbers in Europe and the U.S., a modest rebound in equities, and hope of fiscal stimulus and a move towards government guarantees for toxic assets in the U.S."

That optimism is encouraging risk appetite among currency traders Friday. They sold off both the dollar and yen, considered safe-haven assets.

Alan Ruskin, head of international currency at RBS Greenwich Capital, noted that investors are also unwilling to let go of their riskier positions ahead of Geithner's address.

The euro gained as high as $1.2894 and Y118.35 Friday morning. The dollar also rose against the relatively safer yen, to Y91.85.

Friday morning, the euro was at $1.2877 from $1.2798 late Thursday, while the dollar was at Y91.70 from Y91.18, according to EBS. The euro was at Y118.12 from Y116.76. The U.K. pound was at $1.4662 from $1.4635 and the dollar was at CHF1.1684 from CHF1.1706 late Thursday.

Nonfarm payrolls in January tumbled 598,000, the U.S. Labor Department said Friday, the most since December 1974 and above the 525,000 drop Wall Street economists in a Dow Jones Newswires survey expected. December was revised to show an even steeper decline of 577,000.

The data were worse than expected, but "nothing catastrophic," said David Powell, a currency strategist at Bank of America in London. "There is already a very bad amount of news being priced into global equity markets, and this report doesn't give us a new leg down in risk."

Elsewhere, Canada also reported disappointing employment data Friday, sending the Canadian dollar down sharply.


Canada Morning




The Canadian dollar dropped rapidly in response to news that Canada lost 129,000 jobs in January, sharply weaker than the expected loss of 40,000 and the largest single monthly job loss on record.

The U.S. dollar surged to the C$1.2478 area immediately after the 7 a.m. EST (1200 GMT) release from about C$1.2427 just before. It subsequently registered a session high at C$1.2541, its highest level since Jan. 23, before receding.

The dollar was recently at C$1.2478 again as risk appetite returned.

-By Riva Froymovich, Dow Jones Newswires; 201 938-5063; riva.froymovich@dowjones.com

(Don Curren in Toronto contributed to this report.)

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WORLD FOREX: Euro Extends Gains Vs Dlr On US Stocks
By Riva Froymovich
Of DOW JONES NEWSWIRES

(END) Dow Jones Newswires

February 06, 2009 09:56 ET (14:56 GMT)


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