FOREX-Dollar slips as U.S. jobs-inspired rally fizzles

* U.S. jobs weaker than expected, but solid overall

* Rate futures pare bets on Fed easing at two upcoming meetings

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Recasts, adds new comment, updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, Oct 4 (Reuters) - The dollar slipped on Friday after earlier posting gains following a U.S.

jobs report that underperformed expectations but was solid overall, as investors remained cautious about

political risk in the United States and ongoing trade negotiations with China.

The greenback hit session highs against the yen and euro following the jobs report, after trading

lower for most of the session. But by afternoon trading, the dollar's rally faded.

Data showed that U.S. nonfarm payrolls increased by 136,000 jobs last month. August data was revised

to show 168,000 jobs created instead of the previously reported 130,000 positions. Economists polled by

Reuters had forecast payrolls would increase by 145,000 jobs in September. The unemployment rate dropped to a near 50-year low of 3.5%.

"Given that market expectations have shifted after the ADP (private payrolls) and ISM (manufacturing

and services), people were bracing for something worse than this. So this is in the ballpark of what is

acceptable," said Shaun Osborne, chief market strategist, at Scotiabank in Toronto.

"But there are other issues here for the dollar aside from the Fed easing, such as the U.S. political

backdrop. And we're still looking at the funding tightness issue," he added.

A drop in U.S. unemployment in September pushed traders of U.S. short-term interest rate futures on

Friday to pare bets the Federal Reserve will cut rates at both of its two upcoming meetings. The jobs data was initially a big relief to dollar bulls after two weak reports this week that

heightened U.S. recession fears.

On Thursday, a survey from the U.S. Institute for Supply Management (ISM) showed its non-manufacturing

activity index falling to 52.6 in September, the lowest since August 2016. The non-manufacturing data came on the heels of ISM's manufacturing survey on Tuesday that showed

activity plunging to more than 10-year lows.

The jobs report impact, however, was short-lived as investors grappled with U.S. political tensions.

Diplomatic texts released late Thursday showed that U.S. officials pressured their Ukrainian

counterparts to launch investigations that could benefit President Donald Trump's personal political

agenda in exchange for a meeting between the two countries' leaders. The exchanges were released by Democrats in the House of Representatives as part of an impeachment

investigation to determine whether Trump pressed Ukraine to probe former Vice President Joe Biden and his

son, Hunter Biden, in connection with Ukrainian gas company Burisma.

Trade talks with China were also in focus, with both U.S. and Chinese officials set to meet next week.

In early afternoon trading, the dollar index .DXY was down 0.1% at 98.805, slipping against the yen

to 106.82 yen JPY= .

The euro gained 0.2% versus the dollar to $1.0982 EUR= .

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Currency bid prices at 1:46 PM (1746 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar EUR= $1.0983 $1.0964 +0.17% -4.24% +1.0997 +1.0958

Dollar/Yen JPY= 106.8100 106.9000 -0.08% -3.13% +107.1200 +106.6000

Euro/Yen EURJPY= 117.33 117.20 +0.11% -7.04% +117.4800 +117.0900

Dollar/Swiss CHF= 0.9946 0.9991 -0.45% +1.35% +1.0007 +0.9930

Sterling/Dollar GBP= 1.2331 1.2328 +0.02% -3.34% +1.2356 +1.2277

Dollar/Canadian CAD= 1.3324 1.3335 -0.08% -2.30% +1.3339 +1.3299

Australian/Doll AUD= 0.6773 0.6741 +0.47% -3.92% +0.6773 +0.6739

Euro/Swiss EURCHF= 1.0927 1.0951 -0.22% -2.91% +1.0977 +1.0910

Euro/Sterling EURGBP= 0.8905 0.8889 +0.18% -0.88% +0.8936 +0.8881

NZ NZD= 0.6319 0.6300 +0.30% -5.93% +0.6336 +0.6297

Dollar/Dollar

Dollar/Norway NOK= 9.0891 9.1234 -0.38% +5.21% +9.1328 +9.0906

Euro/Norway EURNOK= 9.9840 10.0084 -0.24% +0.79% +10.0195 +9.9769

Dollar/Sweden SEK= 9.8374 9.8683 -0.12% +9.75% +9.8720 +9.8315

Euro/Sweden EURSEK= 10.8078 10.8205 -0.12% +5.30% +10.8247 +10.7966

Dollar index https://tmsnrt.rs/2MjlGFI

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