The dollar and yen fell against most of their major counterparts after a report showed the U.S. economy lost fewer jobs than forecast as private employers continued to hire, fueling demand for higher-risk currencies. The yen slumped against 13 of its 16 most-traded peers and the dollar dropped against 10 as currencies of commodity exporters including Brazil and Australia gained. U.S. companies added more than twice the number of jobs in June they created the previous month, offsetting the first drop this year in overall nonfarm payrolls. “The market had spent most of the week selling risk and preparing for a disappointing number,” said Brian Dolan, chief strategist at FOREX.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey. “What we got today was decently positive. The extreme pessimism is likely giving way now to a bit of opportunistic risk-buying.” The dollar weakened 0.5 percent to $1.2589 per euro, from $1.2527 yesterday, and rose 0.2 percent to 87.75 yen at 10:38 a.m. in New York. The yen dropped 0.6 percent against the euro to 110.42, from 109.74 yesterday. Nonfarm payrolls fell last month by 125,000 positions, compared with a drop of 130,000 forecast in a Bloomberg News survey of 82 economists, Labor Department figures showed today in Washington. The government cut 225,000 temporary workers conducting the 2010 census, they showed. The number of jobs outside government rose by 83,000 last month, compared with a gain of 110,000 estimated in a Bloomberg survey and a revised increase of 33,000 in May. The jobless rate unexpectedly fell to 9.5 percent, from 9.7 percent. Worse Was Feared “People were fearing it would be much worse,” said Sebastien Galy, a currency strategist at BNP Paribas SA in New York. “The first reaction is one of relief.” The yen earlier fell against most major counterparts as Australia’s government reduced a proposed tax on mining companies, spurring demand for higher-yielding assets. The Japanese currency touched a seven-month high against the greenback yesterday on speculation the U.S. economy may be slow to recover. “The mining tax announcement offered respite for high- yielding currencies and weighed on the yen,” said Neil Mellor, a strategist at Bank of New York Mellon Corp. in London. The euro fell earlier after gaining as much as 2.5 percent yesterday against the dollar, the most on an intraday day basis since May 10, amid signs that funding pressures were easing on European financial institutions. ‘Up Too Fast’ “It’s come up too fast,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “So, we’ll see the euro drop back a little bit lower.” The single currency may strengthen in the near term against the dollar as bond yields advance, according to Royal Bank of Scotland Group Plc. “We remain bearish longer term, but it is time to be tactically square against the dollar, and possibly long for more aggressive short-term trading purposes,” Greg Gibbs, an RBS strategist in Sydney, wrote today in a report. The Aussie rose for a second day versus the greenback, advancing 0.5 percent to 84.77 U.S. cents as Australian Prime Minister Julia Gillard scaled back a proposed tax on mining companies to win their support. The government exempted most commodities, raised the threshold and cut the tax to 30 percent on coal and iron ore earnings, compared with a previous plan to collect 40 percent of all resource profits. “The mining tax agreement is obviously a positive for Australia,” said Tony Allen, head of currency trading at ANZ National Bank Ltd. in Wellington, New Zealand. Benchmark interest rates are 4.5 percent in Australia and 2.75 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net.

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