The dollar slipped on Friday after earlier posting gains following a US jobs report that underperformed expectations but was solid overall, as investors remained cautious about political risk in the United States and ongoing trade negotiations with China. The greenback hit session highs against the yen and euro following the jobs report, after trading lower for most of the session. But by afternoon trading, the dollar's rally faded.

Data showed that US nonfarm payrolls increased by 136,000 jobs last month. August data was revised to show 168,000 jobs created instead of the previously reported 130,000 positions. Economists polled by Reuters had forecast payrolls would increase by 145,000 jobs in September. The unemployment rate dropped to a near 50-year low of 3.5%.

"Given that market expectations have shifted after the ADP (private payrolls) and ISM (manufacturing and services), people were bracing for something worse than this. So this is in the ballpark of what is acceptable," said Shaun Osborne, chief market strategist, at Scotiabank in Toronto. Trade talks with China were also in focus, with both US and Chinese officials set to meet next week. In early afternoon trading, the dollar index was down 0.1% at 98.805, slipping against the yen to 106.82 yen. The euro gained 0.2% versus the dollar to $1.0982.

Copyright Reuters, 2019