The Dollar rose against a basket of currencies on Friday after an unexpectedly small drop in US non-farm payrolls left investors hoping any US recession would prove a shallow one.

News that the struggling economy shed only 20,000 jobs in April also supported views that the Federal Reserve would refrain from cutting interest rates again, provided economic data and financial markets did not deteriorate further. Fed rate cuts totaling 325bp since mid-September have eroded the allure of Dollar-denominated assets to investors seeking higher returns, undermining the Dollar against the high-yielding Euro, Australian and New Zealand dollars.

Labor Department data showed US employers cut 20k jobs in April, marking the fourth straight month of contraction in employment. Analysts have been looking for payrolls to decline by 80k after an upwardly revised loss of 81k jobs in March. The unemployment rate also eased to 5 from 5.1% in March.

UsdJpy surged to a two-month peak of 105.70 and was last trading up 0.95% at 105.38. EurUsd fell to 1.5361, the lowest since March 24, and traded back up at 1.5426, down 0.34%. UsdChf rose to a nine-week high against the Swiss franc to 1.0609, before tracking back down to 1.0573, up 0.93%. GbpUsd traded down 0.32% at 1.9713 after posting 1.9898 intraday high.

With economic data continuing to beat market expectations, analysts said it was becoming more likely that the Fed would keep its key overnight lending rate at 2% for a while. This would support the Dollar against the Euro, especially as perceptions rise that the European Central Bank will be forced to ease monetary policy at some point this year amid increasing signs of slower growth in the euro zone.