The dollar fell the most in a month against the yen after the government’s payrolls report showed employers added the fewest jobs in nine months and the unemployment rate increased to the highest level this year. The yen gained versus all of the other major currencies and the Swiss franc advanced as signs of U.S. weakness spurred demand for a refuge. Canada’s dollar and Mexico’s peso tumbled on concern the nations’ largest trading partner is faltering. The euro fell versus the dollar as regulators sought to contain debt turmoil with more stringent disclosure among lenders. “It’s a bad number for the dollar,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “The yen is obviously the big winner and the commodity currencies are slipping, especially the Canadian dollar.” The dollar slid 0.8 percent to 80.63 yen at 10:50 a.m. in New York, from 81.25 yesterday, and was headed for a weekly decrease of 0.3 percent. The greenback earlier fell 0.9 percent, the most since June 3, when it tumbled as much as 1.1 percent on disappointing May payrolls figures. The U.S. currency appreciated 0.6 percent to $1.4273 against the euro, from $1.4364. The euro dropped 1.4 percent to 115.09 yen. The Standard & Poor’s 500 Index dropped 1.3 percent. Treasury 10-year note yields fell 11 basis points, or 0.11 percentage point, to 3.03 percent after touching 3.02 percent, the lowest level since June 28. U.S. Payrolls Payrolls expanded by 18,000 in June after a revised increase of 25,000 in the previous month, the Labor Department reported today. The median forecast of 85 economists in a Bloomberg News survey was for 105,000 more jobs. The unemployment rate unexpectedly increased to 9.2 percent. Mexico’s peso declined for the first time in three days versus the U.S. dollar, depreciating 0.7 percent to 11.6210, and fell 1.5 percent to 6.936 yen. Mexico’s central bank held its overnight rate at 4.50 percent for a 20th straight meeting. The Canadian currency slid 0.3 percent to 96.14 cents versus the greenback. It earlier touched 95.66 cents, the strongest level since May 11, after the government reported that Canada’s employers added more jobs last month than economists forecast. Canada’s dollar dropped 1.2 percent to 83.78 yen. The Swiss franc appreciated 0.7 percent to 83.86 centimes versus the dollar and gained 1 percent to 1.20196 against the euro. The franc rallied to a record 1.1806 versus the shared currency on June 24. Drop in Euro The euro headed for a 1.4 percent weekly drop versus the dollar, its biggest in almost a month, as European regulators tried to end the region’s banking crisis by forcing firms to publish details of capital shortfalls in a more stringent and detailed set of stress tests. Greek, Portuguese, Irish, Italian and Spanish government bonds slumped. Lenders will be made to disclose capital levels, estimates for profitability in 2011 and 2012 and their holdings of sovereign debt in the July 15 tests, the London-based European Banking Authority said in a statement today. The European Central Bank signaled more interest-rate increases yesterday after raising the target lending rate by a quarter-percentage point to 1.50 percent. Policy makers also loosened collateral rules for Portuguese bonds. “We have moved onto a more acute phase of the sovereign-debt crisis judging by the intensity of the rise in peripheral bond yields and the widening of the spreads,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “The market is looking for excuses to sell the euro. The market is desperate to find excuses that these ECB rate hikes are making things worse, not better.” U.S. Borrowing Costs U.S. policy makers have kept the target lending rate at a record low zero to 0.25 percent since December 2008 to support the economy. The Federal Reserve ended its $600 billion program of debt buying on June 30. IntercontinentalExchange Inc.’s Dollar Index, which measures the greenback against the currencies of six major U.S. trading partners, gained 0.1 percent to 75.031, from 74.957. The gauge of the U.S. currency fell 0.7 percent on June 3, when the Labor Department reported that employers added fewer jobs than economists forecast. The index increased 0.9 percent on May 6, when more positions were added than projected. The dollar is the second-worst performer this year among 10 developed-nation currencies, according to Bloomberg Correlation- Weighted Currency Indexes, having fallen 5.2 percent. The biggest loser is the yen, down 5.6 percent. One-month implied volatility for the euro-dollar exchange rate increased today for the fourth time in five days, rising to 11.43 percent. To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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