By Oliver Biggadike and Lukanyo Mnyanda April 1 (Bloomberg) -- The dollar climbed to a seven-month high against the yen after a report showed first-time claims for U.S. unemployment benefits fell, adding to optimism tomorrow’s jobs report will show growth in the labor market. The euro touched the highest level against Japan’s currency in two months, while the dollar was little changed versus the euro after rising from its weakest since March 23. The Canadian dollar strengthened to within one cent of parity with its U.S. counterpart. Odds of a Federal Reserve rate boost by November rose from a month ago, futures trading in Chicago showed. “The U.S. economy is recovering and recovering sharply,” said Sacha Tihanyi, a currency strategist in Toronto at Bank of Nova Scotia, Canada’s third-largest bank. “As long as there’s some ambiguity over the timing of the Fed, and we see a little bit of debate over what ‘extended period of time’ means in the Fed language, then the data is positive for the U.S. dollar because it will help move up expectations for Fed rate hikes.” The dollar rose 0.4 percent to 93.88 yen at 10:25 a.m. in New York, from 93.47 yesterday, after touching 94.04, the highest level since Aug. 28. The euro rose 0.4 percent to 126.78 yen, from 126.27 yen yesterday, and reached 126.95, the highest since Feb. 3. The dollar traded at $1.3507 per euro, compared with $1.3510 yesterday. It earlier touched $1.3561, the weakest level since March 23. Canada’s currency appreciated as much as 0.6 percent to C$1.0090 per U.S. dollar before trading at C$1.0100. Manufacturing Report Treasury 10-year yields rose, extending the dollar’s rally versus the yen after a report showed manufacturing in the U.S. expanded last month at the fastest pace since July 2004. The Fed reiterated at the conclusion of its last policy meeting, on March 16, that interest rates will stay low for an “extended” period of time. The benchmark rate has been a range of zero to 0.25 percent since December 2008. Futures on the CME Group Inc. exchange showed a 56 percent chance policy makers will raise the target rate for overnight bank lending by at least a quarter-percentage point by its November meeting, compared with 47 percent odds a month ago. The greenback advanced versus the yen before a government report tomorrow that economists say will show U.S. employers added jobs in March. Payrolls probably rose by 182,000 jobs in the biggest gain in three years after decreasing 36,000 in February, according to the median forecast of 82 economists in a Bloomberg News survey. Jobless Claims Initial jobless-benefit applications declined by 6,000 to 439,000 in the week ended March 27, bringing the average over the past month to the lowest level since 2008, Labor Department data showed today. The figures were in line with economists’ forecasts. The franc touched a record against the euro for a second day as Swiss industrial output expanded at the fastest pace in more than three years. It strengthened as much as 0.6 percent to 1.4151 to the euro, before trading at 1.4161. The Institute for Supply Management’s factory index rose to 59.6, higher than the median forecast of 57 in a Bloomberg survey of economists, from 56.5 in February, figures from the Tempe, Arizona-based group showed today. Readings above 50 signal expansion. To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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