“* Weak U.S. jobs, services data adds to dollar’s woes
* Euro hits 17-month high but fades ahead of ECB meeting
* Dollar at 6-week low vs yen; high-yield FX struggles
* ECB still seen outpacing Fed on rate hikes (Recasts, updates prices, adds U.S. data, comment)
NEW YORK, May 4 (Reuters) – The dollar fell to a fresh three-year low on Wednesday and the euro briefly rose above $1.49 as weaker-than-expected U.S. employment data convinced investors that U.S. interest rates would remain low this year.
The yen also hit a six-week high against the dollar after data showed the pace of growth in the dominant U.S. services sector also slowed unexpectedly in April, another sign the U.S. economy may be hitting a soft patch. See [ID:nN04186623]
With markets worried about a yawning U.S. budget deficit, traders said signs of slower growth will only add to trouble for the dollar, which fell to a three-year low against major currencies Wednesday. It has lost 7.7 percent in 2011.
‘The dollar got beat up pretty badly against the euro,” said Firas Askari, head of foreign exchange trading at BMO Capital Markets.
“The U.S. fiscal situation is a concern. Now it seems the U.S. economy isn’t just tepid but actually cooling off again. That’s not encouraging.”