Euro hits $1.48 on weak payrolls

The euro rallied to $1.4824 against the dollar immediately after US nonfarm payrolls increased by a smaller than expected number in December, raising fears that the US may be in a recession, forcing the Fed to cut interest rates more aggressively and thus reduce the dollar’s attractiveness.

US nonfarm payrolls rose by 18,000, the least since August 2003, after a 115,000 gain in November that was larger than initially reported, raising the odds the Federal Reserve will need to cut interest rates to ward off an economic slowdown. The jobless rate rose to 5.0 percent from 4.7 percent in November.

Economists had forecast an increase of 70,000 in payrolls, compared with an originally reported gain of 94,000 in October. The December job gain puts the total payroll increase for 2007 at 1.33 million, the fewest in four years. The jobless rate stood at 4.5 percent at the end of 2006.

After touching the day’s high of $1.4824, the euro then eased back to trade at $1.4785 against the dollar, which also lost against the other major currencies. The dollar fell to JPY108.58, but was above its session low of JPY108.25, while against the Swiss franc, the dollar was last at CHF1.1106, near the day’s low.

Sterling improved to $1.9810 against the weakening dollar, and was well above Friday low of $1.9672. Spot gold was last at $864.25 in a 856.6-869.4 range, while silver was last at $15.33 in a 15.16-15.47 range.