By Catarina Saraiva and Ben Levisohn June 4 (Bloomberg) -- The dollar fell versus the yen as a report showed U.S. employers added fewer jobs than forecast in May, increasing concern the economy may be slow to recover. “We’ll see Wall Street take it on the chin and a more risk-averse market,” Joe Manimbo, a market analyst in Washington at Travelex Global Business Payments, a currency- exchange network, said before the report. The dollar fell 0.7 percent to 92.06 yen at 8:38 a.m. in New York, from 92.71 yen yesterday. The euro tumbled 1.7 percent to 110.84 yen, from 112.76, and dropped 1.1 percent to $1.2025, from $1.2163. The euro touched $1.2019, the lowest since March 2006. Payrolls rose by 431,000 last month after a 290,000 increase in April, figures from the Labor Department in Washington showed today. The gain was smaller than the 536,000 median forecast in a Bloomberg News survey and reflected a 411,000 jump in government hiring of temporary help for the 2010 census. Private payrolls rose a less-than-forecast 41,000. The unemployment rate fell to 9.7 percent as Americans dropped out of the labor force. The Swiss franc earlier strengthened beyond 1.40 versus the euro for the first time after a Hungarian government spokesman said “it’s no exaggeration to talk about default,” boosting demand for Switzerland’s currency as a haven. The yen rose versus all of its major counterpart as stocks and oil fell, reducing demand for growth-linked currencies before a data forecast to show U.S. payrolls grew the most since 1983. ‘Shift Out of Euro’ “There are tensions in European banks that are dragging down banking stocks, and we have tensions in Eastern Europe that are putting risk markets on their back foot,” said Jens Nordvig, a managing director of currency research in New York at Nomura International Plc. “We’re in the middle of a structural asset allocation shift out of the euro.” Societe Generale SA declined to comment on reports that cited speculation the bank may face losses on derivatives. “If we had something to say, we would have already communicated,” said Laura Schalk, a Paris-based spokeswoman. Hungary is in a “grave situation” because the previous government “manipulated” figures and “lied” about the state of the economy, Peter Szijjarto, spokesman for Prime Minister Viktor Orban, said at a news conference in Budapest. A fact- finding panel will probably present preliminary figures on the state of the economy this weekend, Szijjarto said. “It’s clear that the economy is in a very grave situation,” Szijjarto said. “We need a clean slate to formulate our economic action plan, and the fact-finding committee will provide just that.” ‘Other Fears’ Hungary needed a 20 billion-euro ($24 billion) international bailout to avert default in 2008. “Talk of a Hungary default spurs other fears,” said Amelia Bourdeau, a currency strategist in Stamford, Connecticut, at UBS AG. “The Swiss franc appreciates because it’s a safe haven and because many Hungarian mortgages are in francs. Risk is off, so the dollar and yen rose.” Group of 20 nations finance chiefs began talks today in Busan, South Korea, after central banks from Australia to Canada identified investor reaction to Europe’s indebtedness as a hurdle to higher interest rates. The euro has fallen 16 percent against the dollar this year on concern Europe’s sovereign-debt crisis will damage the region’s banks and slow its economic growth. “Behind the day-to-day risk on and risk off, market perceptions of fiscal risk have been the key underlying driver of the majors over the past few months,” Adam Boyton, a senior currency strategist at Deutsche Bank AG in New York, wrote in an e-mailed note received today. In Japan, Naoto Kan became prime minister, replacing Yukio Hatoyama, who resigned this week. “Kan has so far shown a hard-line stance against the Bank of Japan and he also apparently favors a weak yen,” said Yuichi Kodama, chief economist in Tokyo at Meiji Yasuda Life Insurance Co., Japan’s third-largest life insurer. To contact the reporters on this story: Ben Levisohn in New York at blevisohn@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net.

Source