The euro headed for a weekly gain against the dollar, snapping two weeks of losses, on speculation a capital backstop for European lenders will help stem the region’s debt crisis. The 17-nation currency was poised for its first weekly advance in a month versus the Swiss franc after the European Central Bank said yesterday it will reintroduce yearlong loans, giving banks access to unlimited cash through January 2013, and resume purchases of covered bonds to encourage lending. The Australian and New Zealand dollars strengthened as gains in Asian stocks boosted demand for higher-yielding assets. The ECB’s action “is shoring up European growth prospects, and it’s shoring up European banks,” said Adam Carr, senior economist in Sydney at ICAP Australia Ltd., a unit of the world’s largest interdealer broker. “That is very positive euro, and I would expect to continue to see the euro being bid as a result.” The euro traded at $1.3453 at 8:38 a.m. in London from $1.3437 yesterday, having strengthened 0.5 percent this week. The shared currency was at 103.10 yen from 103.09 yen. It bought 1.2374 francs from 1.2370, poised for a 1.8 percent advance this week. The dollar was little changed at 76.59 yen. While the ECB took steps to bolster the region’s lenders, the European Commission is pushing for a coordinated capital injection into banks, and the German chancellor Angela Merkel said policy makers “shouldn’t hesitate” if it turns out financial institutions are undercapitalized. Merkel will meet with French President Nicolas Sarkozy in Berlin on Oct. 9 for their eighth one-on-one summit in 20 months. Australian Dollars The Australian and New Zealand currencies appreciated for a fourth day against the greenback as the MSCI Asia Pacific Index of shares advanced 2 percent. The Euro Stoxx 600 Index gained 0.5 percent. The Australian dollar rose 0.7 percent to 98.09 U.S. cents. The so-called kiwi advanced 0.4 percent to 77.47 cents. “The market has taken great confidence from the moves by the ECB and BOE and also the realization that politicians are getting a handle on the underlying issue, being bank capital,” said Darryl Conroy, an analyst at Suncorp Bank in Brisbane. “A number of the commodity currencies have tracked a very similar and positive path on less fear emanating out of Europe.” U.S. Payrolls Losses in the dollar and yen were tempered before U.S. reports today forecast to show a gain in unemployment in September was not enough to bring down the jobless rate. Employment climbed by 55,000 workers after no change in August, according to the median forecast of 91 economists surveyed by Bloomberg News. The jobless rate was 9.1 percent for a third month, according to the forecasts. “The risks of a negative outcome for payrolls is certainly higher than the market is currently expecting,” said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp., Australia’s second-largest lender. “Demand across Europe and Asia and the U.S. is slowing as well. That’s something that should benefit the U.S. dollar.” President Barack Obama said Congress should pass his $447 billion jobs bill quickly to “guard against another downturn” in the U.S. economy if the European debt crisis worsens. He endorsed a proposal by Senate Democrats to impose a surtax of 5.6 percent on people earning at least $1 million to generate about $450 billion to pay for his plan. To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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