LONDON, Oct 5: A spirited rally by the US dollar, which followed a strong report on US job creation in September, fizzled late on Friday as the news was not enough to sustain investor confidence in the US unit.

The single European currency, the euro, in late-day deals was at $1.4152, up from $1.4136 late Thursday in New York.

But the euro in mid-afternoon fell to a two-week low of $1.4033 on news that the US economy last month created 110,000 jobs after 89,000 in August.

The news from the Labour Department suggested that the world’s biggest economy might not be heading for recession and that the US Federal Reserve would not now be in a rush to lower interest rates, which would make the dollar less attractive.

“It was an all-round good (jobs) report and initially the dollar gained on the back of that,” said Ian Stannard of BNP Paribas.

“But the bigger picture suggests the dollar performance is going to be far more mixed.”

Bear Stearns currency analyst Steve Barrow said the failure of the dollar to hold its gains against the euro reflected a lack of market demand for the greenback.

“The payroll numbers this month were as unambiguously good as they were nambiguously bad last month, but the data is not really all that important any more,” he said.

The dollar in recent weeks has come under heavy selling pressure on speculation that the Federal Reserve, which reduced borrowing costs by half a point last month, will continue to cut its benchmark interest rate as signs emerge of a slowdown in US momentum.

Meanwhile, the Canadian dollar hit a string of fresh 31-year highs against its US counterpart after data showed the Canadian economy created more than three times the number of jobs economists had forecast.

Employment in Canada rose by 51,000 in September, well above forecasts for a much more modest rise of around 16,000.

The news caused the Canadian currency to come close to breaking through the 0.98 per US dollar mark, hitting a peak of 0.9804, its highest level since late 1976.

The euro was changing hands at $1.4152, against $1.4136 late on Thursday, 165.28 yen (164.70), 0.6927 pounds (0.6933) and 1.6648 Swiss francs (1.6598).

The dollar stood at 116.80 yen (116.50) and 1.1764 Swiss francs (1.1742).

The pound was being traded at 2.0429 dollars (2.0383).—AFP