NEW YORK, USA (AP) — A drop in the US jobless rate to a nearly two-year low failed to give a lift to the dollar.

In mid-morning trading in New York, the euro traded at US$1.3983, hitting a four-month high of US$1.4007 earlier and up from US$1.3959 late Thursday. The dollar faded to 82.29 Japanese yen from 82.37 yen. The British pound dipped to US$1.6268 from US$1.6273.

Friday’s Labor Department’s February jobs report, which showed the US unemployment rate dropping to 8.9 percent last month, was actually disappointing for the market, said Morgan Stanley currency strategist Ron Leven.

The government said the economy added a net 192,000 jobs last month, with 222,000 in job gains from private employers. Leven said there had been market rumours that the report could show more than 200,000 total job gains in February, however. And some economists were unimpressed.

“Government continues to shed jobs in numbers, and wage growth remains tepid,” wrote Krishen Rangasamy of CIBC World Markets in a research note. State and local governments, strapped with gaping budget deficits, cut jobs in February, while the federal government didn’t add any.

Rangasamy said that given the extremely weak report from January, when blizzards dented hiring, February’s report should have been even stronger.

The US currency has been weighed down this year because investors believe that rising food and energy prices will drive central banks overseas to lift interest rates far earlier than the Federal Reserve will.

Central bankers increase interest rates to counter inflation, and the higher rate often causes the currency’s value to rise. But boosting interest rates can also slow economic growth.

The head of the European Central Bank, Jean-Claude Trichet, on Thursday said it was possible that the ECB would lift rates in April because of the threat of inflation from climbing food and energy prices.

But the Fed, concerned with high unemployment, is expected to keep the key US rate near zero for a long time — some analysts say through the end of next year. The Fed’s favoured inflation measure strips out food and energy costs, and Fed Chairman Ben Bernanke has said the big run-up in oil prices because of unrest in the Middle East is unlikely to cause serious inflation in the US.

A United Nations agency said on Thursday that global food prices hit a record high last month, and could increase further. The price of a barrel of oil in New York hit a two-year high on Friday above US$103 a barrel.

In other trading Friday, the dollar dropped to 97.09 Canadian cents from 97.19 Canadian cents, and tumbled to 0.9244 Swiss franc from 0.9319 Swiss franc. A bit earlier in the day, the US currency struck its most recent record low against the Swiss currency earlier at 0.9221 Swiss franc, and fell to a three-year low of 96.99 Canadian cents.