Forex - Dollar enjoys shortlived gains after U.S. payrolls data

LONDON(Thomson Financial) - The dollar enjoyed shortlived gains after U.S. non-farm payrolls data revealed smaller losses than the market had expected.
The Labor Department said the economy lost 51,000 jobs in July, far fewer than the 72,000 jobs that economists had expected, although this has pushed the unemployment rate to its highest level in more than four years.
'A better-than-expected return for the July payroll report and also an upward revision to both June and May,' said Peter Stoneham, an analyst at Thomson Reuters IFR Markets.
The data sent the euro down to its weakest level against the dollar since June 24, before recovering again.
News that a survey has shown that U.S. manufacturing activity did not contract in July also helped briefly to support the dollar.
The ISM Manufacturing Index fell slightly to 50.0 in July from 50.2, beating expectations for a bigger decline to 49.2 and putting it at the level marking breakeven between expansion and contraction in the sector.
The euro had remained firmly on the back foot against the dollar earlier following a weak survey on euro zone manufacturing activity.
The purchasing managers' index for the euro zone manufacturing sector fell to its worst level in more than five years in July, even as raw material costs continued to soar, pressuring manufacturers into raising prices at the fastest rate in 18 months.
At 4.13 p.m., the euro was trading at $1.5582, up from $1.5560 at 10.43 a.m. Against the yen, the euro edged down to 167.42 from 167.50.
Elsewhere, the pound remained under pressure against the dollar and the euro following Friday's weak release of a key survey on UK manufacturing activity.
The purchasing managers' index on the manufacturing sector showed a worse-than-expected fall to 44.3 in July from June's 45.9, with the reading at its weakest since December 1998.
At 4.15 p.m., the pound had fallen to $1.9745 from $1.9779 at 10.43 a.m., and weakened to 0.7888 pounds per euro from 0.7866 earlier.