After initial weakness on Friday, the U.S. dollar rallied well, riding on mixed jobs data that showed fewer additions in employment in September, but the jobless rate dropped. However, the currency retreated by mid morning, weighed down by trade and political uncertainty.

The U.S. Labor Department’s jobs report showed weaker than expected job growth in September, while the unemployment rate unexpectedly dropped to a nearly 50-year low.

The report said non-farm payroll employment rose by 136,000 jobs in September compared to economist estimates for an increase of about 145,000 jobs.

Meanwhile, the increases in employment in July and August were upwardly revised to 166,000 jobs and 168,000 jobs, respectively, reflecting the addition of 45,000 more jobs than previously reported.

The average monthly job growth has still slowed from 223,000 jobs per month in 2018 to 161,000 jobs per month so far in 2019.

The Labor Department also said the unemployment rate fell to 3.5% in September from 3.7% in August, dropping to its lowest level since hitting a matching rate in December of 1969.

The dollar index, which rallied to 99.0 from a low of 98.74, failed to sustain at higher levels and dropped to 98.81 later on in the day.

Against the euro, the dollar was down 0.13% at 1.0979, after having strengthened to 1.0958 soon after the release of the jobs data. A positive report on Germany’s construction sector supported the euro.

Germany’s construction sector expanded modestly in September, led by a growth in housing activity that offset slower declines in commercial and civil engineering, survey data from IHS Markit showed on Friday.

The construction purchasing managers’ index, or PMI, rose to 50.1 in September from August’s 62-month low of 46.3. Any reading above 50 indicates expansion in the sector.

The pound sterling was up marginally against the greenback at $1.2334, after having weakened to $1.2276 earlier in the day. The sterling’s earlier weakness was due the survey results from the British Chambers of Commerce that said the UK economic conditions weakened in the third quarter due to a marked deterioration in manufacturing sector activity.

Against the Japanese currency, the dollar was little changed at 106.89 yen by late afternoon, dropping from the day’s high of 107.12 yen a dollar.

Against the loonie, the dollar was down 0.17% at 1.3315, with data on Canada’s trade balance lifting the Canadian currency.

Against Swiss franc and the Aussie, the dollar was down notably at 0.9951 and 0.6766, respectively.

The material has been provided by InstaForex Company – www.instaforex.com