By Oliver Biggadike and Inyoung Hwang April 1 (Bloomberg) -- The dollar climbed to a seven-month high against the yen after economic reports added to signals that tomorrow’s payrolls report will show growth in the U.S. labor market. The euro touched the strongest level against Japan’s currency since January and rose to the highest in almost two weeks versus the dollar as global stocks and oil rallied. The Swiss franc plunged from a record high versus the euro. The Canadian dollar was within one cent of parity with its U.S. counterpart. Odds of a Federal Reserve rate increase 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 93.85 yen at 12:27 p.m. in New York, from 93.47 yesterday, after touching 94.04, the highest level since Aug. 28. The euro rose 0.9 percent to 127.38 yen, from 126.27 yen yesterday, and reached 127.52, the highest since Jan. 26. The dollar fell 0.5 percent to $1.3573 per euro, from $1.3510 yesterday. It touched $1.3588, the weakest level since March 19. Swiss Franc The franc fell as much as 1.2 percent after touching a record against the euro for a second day. It earlier reached 1.4145 to the euro, before trading at 1.4324. The Swiss National Bank declined to comment. “There’s little doubt in my mind intervention took place,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. “It’s not just a huge intervention on euro-franc, but also on the Swiss franc-dollar. The thin market is giving the Swiss National Bank greater sway right now.” Canada’s currency appreciated as much as 0.8 percent to C$1.0069 per U.S. dollar before trading at C$1.0078. Treasury 10-year yields rose, extending the dollar’s rally versus the yen, after a report showed U.S. manufacturing expanded last month at the fastest pace since July 2004. The Institute for Supply Management’s factory index increased to 59.6, indicating quicker growth than February’s 56.5 reading. Rising Expectations “People are revising upward their expectations for yields and the potential for the Fed to raise rates,” said Sebastien Galy, a currency strategist at BNP Paribas SA in New York. “We’re positioned for an extremely aggressive outcome in payrolls. You get long dollar-yen like crazy.” The long position is a bet for gains in the dollar. The Fed reiterated at the end 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 in a range of zero to 0.25 percent since December 2008. Futures on the CME Group Inc. exchange showed a 57 percent chance the Fed will raise the target rate for overnight lending between banks by at least a quarter-percentage point by November, up from 47 percent odds a month ago. Initial jobless-benefit claims in the U.S. 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. U.S. employers added 184,000 jobs last month in the biggest gain in three years, according to the median forecast of 83 economists in a Bloomberg News survey before the Labor Department reports the data tomorrow. Payrolls shed 36,000 jobs in February. Euro Versus Yen The euro climbed against the yen as traders bet the monetary union’s economic expansion will outpace that of Japan, where deflation has pushed down consumer prices. The 16-nation currency slumped to a one-year low of 119.66 yen on Feb. 25 before rallying as European leaders agreed March 25 on a plan for a mix of International Monetary Fund and bilateral loans to provide aid to Greece if necessary. “Now that you’ve taken sovereign default off the table, people are more focused on growth,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “You could see a bit more confidence in the euro zone. It’s kind of pick-your- favorite-trade against the yen.” UBS recommends buying euros to bet on gains to 130 yen, Kim said in a phone interview. The Zurich-based bank started the trade at 125.22 yen, he said. To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net

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