By Oliver Biggadike April 3 (Bloomberg) -- The dollar touched the strongest level against the yen in more than seven months as a government report added evidence to speculation that the labor market is recovering, helping to fuel U.S. economic growth. The greenback’s rise against the Japanese currency tied last week’s gain, the biggest since December, as the Labor Department said U.S. employers added 162,000 jobs in March. The Swiss franc rose to a record against the euro before dropping amid speculation the central bank intervened. Canada’s currency came within one cent of parity with the dollar. A slide in pending U.S. home sales slowed, a report may show this week. “A strong jobs report means a stronger dollar against most currencies, including the yen,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York, who predicts the greenback may rise to 100 yen in six months. “The core underlying trend in terms of overall private-sector hiring has probably turned positive in the first quarter of 2010.” The dollar advanced 2.2 percent, matching the most since the five days ended Dec. 4, to 94.57 yen in New York yesterday, from 92.52 on March 26. It touched 94.69 yen, the highest level since Aug. 24. The dollar fell 0.6 percent to $1.3484 per euro, the first weekly slide since March 12, from 1.3410 on March 26. The yen fell 2.7 percent to 127.50 versus the 16-nation currency, the second weekly loss. It closed March 26 at 124.06. ‘Getting Stronger’ The increase in employment reported yesterday in Washington was the biggest since a 239,000-job gain in March 2007. It followed a revised reduction of 14,000 in February, fewer cuts than first estimated. The median forecast in a Bloomberg survey was for an increase of 184,000 jobs. The unemployment rate held steady at 9.7 percent. Treasury Secretary Timothy F. Geithner said the report showed the U.S. economy is “getting stronger.” Business investment is expanding and exports are “coming back,” he said yesterday in an interview on Bloomberg Television. The dollar rallied yesterday against 13 of its 16 most- traded counterparts, advancing 0.8 percent versus Switzerland’s franc, the worst performer. Mexico’s peso posted the biggest increase among the three currencies that gained, rising 0.2 percent to 12.2995 versus the greenback. “It’s a dollar move,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. “The dollar is cheap because it’s trading below fair-value models. And what does that mean? It means that U.S. labor costs are relatively cheaper compared to Europe, or maybe Japan, or the U.K. or Switzerland.” Rate Bets Financial markets in the U.S., Europe, Australia and Hong Kong were closed yesterday for the Good Friday holiday. Futures on the CME Group Inc. exchange showed a 60 percent chance the Fed will raise the target rate for overnight bank lending by at least a quarter-percentage point by November, up from 45 percent odds a month ago. It has been a range of zero to 0.25 percent since December 2008, and policy makers reiterated in March it would stay low for an “extended” period. The payrolls report “does signal the U.S. is recovering faster than Japan and is likely to hike rates sooner,” said Amelia Bourdeau, a currency strategist at UBS AG in Stamford, Connecticut. “Japan’s economy is recovering, but it’s still not strong enough.” Bourdeau forecast a dollar rally to 95 yen in the next three months. The Canadian dollar gained 1.6 percent since to C$1.0106 per greenback after strengthening to as much as C$1.0068 on April 1. It touched C$1.0062 on March 19, the closest to parity with its U.S. counterpart since July 2008. Canada’s biggest trading partner is the U.S. Swiss Franc The franc slid April 1 to $1.4411 per euro from a record 1.4145 amid speculation the Swiss National Bank sold the currency. It ended the week at 1.4333. The SNB declined to comment. Central banks intervene by purchasing or selling currencies to influence exchange rates. “It’s pretty clear from the price action that the SNB is in the market, and quite aggressively as well,” Geoffrey Yu, a currency strategist at UBS in London, said on April 1. President Barack Obama urged China in a call on April 1 to help balance global growth. Strategists said President Hu Jintao’s decision to visit Washington this month increases the likelihood his nation will escape being branded a currency manipulator by the U.S. Obama also sought Hu’s support for cooperation to help stop Iran from developing nuclear weapons. Manipulator Label Hu’s presence at the nuclear summit improves the chances China won’t be labeled a manipulator when the U.S. Treasury releases its biannual report on exchange rates, said China International Capital Corp., a Beijing-based investment bank that’s part-owned by Morgan Stanley. The People’s Bank of China said in its 2009 international financial markets report posted on its Web site that the dollar will have only a limited rebound in 2010 because of the nation’s high fiscal deficit and low interest rates. Pending home sales in the U.S. fell 1 percent in February after tumbling 7.6 percent in the previous month, according to the median forecast in a survey of 21 economists by Bloomberg News. The National Association of Realtors is scheduled to report the data on April 5. To contact the reporter on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net

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