LONDON (AFP) - The dollar slumped dramatically after disappointing US jobs data for September raised concerns that the world's largest economy has not fully emerged from the so-called "soft spot" experienced earlier in the summer.
The single European currency rose to 1.2419 dollars in late European trading from 1.2284 late on Thursday in New York.
The dollar fell to 109.47 yen from 111.15 on Thursday.
Official figures showed that US employers hired 96,000 extra workers in September, far fewer than the 150,000 expected, and providing ammunition for Democratic challenger Senator John Kerry ahead of Friday's second debate with President George W. Bush.
In addition, the Labor Department revised down the previous month's data.
Shortly after the data release, the euro jumped over a cent to a high of 1.2424 dollars, from 1.2289 before the release, while the US currency slipped below the 110-yen mark from 110.63 previously.
"The knee-jerk reaction to the data was unsurprisingly negative," said Mitul Kotecha, head of global currency research at CALYON.
However, Kotecha said the data was unlikely to push the euro above the 1.1900-1.2450 dollars range it has hovered within over the past months.
"Whilst it may result in little more uncertainty regarding the November Fed (US Federal Reserve) decision, we maintain that a quarter point hike remains likely," he said.
John Ryding, an analyst at Bear Stearns, agrees that there is "nothing" in Friday's report to discourage the Fed from raising rates another quarter point on November 10.
"We think employment will pick up in the coming months as evidenced by the strong growth in hours worked in the third quarter and the strength of recent labor market surveys," he said.
Despite the data, markets are still pricing in just one more quarter point rate hike in the US this year. US borrowing costs currently stand at 1.75 percent.
Meanwhile, the euro was little moved by recent negative news on the euro zone, which raised expectations that a rate hike by the European Central Bank could now be delayed well into next year.
German industrial production data did little to change the market's underlying sentiment towards economic prospects in the euro zone.
The euro was changing hands at 1.2419 dollars against 1.2284 late on Thursday in New York, 135.90 yen (136.55), 0.6908 pounds (0.6890) and 1.5510 Swiss francs (1.5527).
The dollar stood at 110.47 yen (111.15) and 1.2485 Swiss francs (1.2639).
The pound was at 1.7941 dollars (1.7825), 196.31 yen (198.12) and 2.2401 Swiss francs (2.2525).
On the London Bullion Market, the price of an ounce of gold stood at 421.75 dollars against 418.10 late on Thursday.