By Deborah Levine & William L. Watts, MarketWatch
NEW YORK (MarketWatch) -- The dollar advanced on Friday, with the most notable gains coming versus the Japanese yen, after the Labor Department said the U.S. economy lost more jobs in February than economists had anticipated.
"It reinforces that the U.S. economy is on the path towards recovery," Sophia Drossos, co-head of global foreign-exchange strategy at Morgan Stanley. "The dollar is going to continue on an upwards trajectory versus the euro and yen."
The dollar rose 1.2% to buy 90.22 yen, up from 89.12 yen on Thursday.
The dollar index (DXY 80.69, +0.13, +0.17%) , which measures the greenback against a trade-weighted basket of six major currencies, jumped to 80.704, up from 80.575 late Thursday.
The British pound reversed a small gain to turn sharply lower after the data, then rebounded to trade at $1.5030, up very slightly from Thursday.
The euro briefly fell as low as $1.3530, near the lowest since May 2009, after the data's release. It recovered to trade at $1.3569, from 1.3577 in late New York trading on Thursday.
U.S. nonfarm payrolls declined by 36,000 jobs last month, fewer than the average forecast of analysts, though estimates varied widely depending on the expected impact of last month's snowstorms. See story on payrolls.
The unemployment rate stayed at 9.7%, while economists expected it would turn back up to 9.8%.
A good reading on payrolls promotes "the view that the U.S. economy is chugging along slowly causing some more dollar bulls to challenge a nine-month low in the euro," said strategists at Interactive Brokers.
Greece meetings
The euro had been in positive territory before the U.S. data as Greece's sale Thursday of a 5 billion euro 10-year bond, with helped remove some of the Greek-related stress that has plagued the euro, analysts said.
Greek Prime Minister George Papandreou is set to meet later Friday with German Chancellor Angela Merkel in Berlin and to travel to Paris this weekend to meet with French President Nicolas Sarkozy. Ahead of the meeting, Merkel was quoted as saying Greece had taken a courageous step to address its budget problems. Read about Papandreou's meeting with Merkel.
But German officials have played down the prospect of announcing concrete measures to aid Greece.
While worries over sovereign debt issues continue to linger, events over the past day indicate the worst of the crisis may be over at least for now, said Boris Schlossberg, director of currency research at GFT.
"The successful Greek bond auction and the meaningful austerity measures implemented by Greek authorities may have pacified the debt markets for the time being," he said.
Bank of Japan
The yen had been weaker since Asian trade after a report suggested the Bank of Japan might consider further easing steps.
The BOJ's policy board is expected to discuss such steps at a two-day meeting starting March 16, Japanese business daily Nikkei reported. See story on BOJ easing plan.
"I haven't heard such a message directly from the BOJ. But both the government and the bank share the stance that each has to make its own efforts to beat deflation," Japanese Finance Minister Naoto Kan said Friday, according to Dow Jones Newswires.
