The dollar held a two-day drop versus the euro before data forecast to show U.S. jobs growth slowed and the unemployment rate remained unchanged, supporting the case for the Federal Reserve to consider monetary easing. Europe’s common currency climbed versus the greenback yesterday, paring this week’s drop, after Greek Prime Minister George Papandreou signaled he won’t call for a referendum on a bailout plan. The yen is set for its first five-day drop against the dollar in three weeks after Japan on Oct. 31 sold the currency to weaken it. Australia’s dollar declined after its central bank cut forecasts for economic growth and inflation. “If you get a better-than-expected payrolls result, but it’s not good enough to bring the unemployment rate down, then that will probably keep expectations that there may be further policy easing down the track alive,” said John Kyriakopoulos, Sydney-based head of currency strategy at National Australia Bank Ltd. That “tends to hurt the U.S. dollar,” he said. The dollar traded at $1.3812 per euro as of 2:14 p.m. in Tokyo, after falling 0.6 percent to $1.3823 yesterday. It trimmed this week’s gain to 2.5 percent. The European currency bought 107.77 yen from 107.90 and has risen 0.5 percent since Oct. 28. The yen traded at 78.02 per dollar from 78.06 yesterday and 75.82 last week. The Japanese currency climbed to a postwar record of 75.35 per dollar on Oct. 31 before the government stepped into foreign-exchange markets for the third time this year. U.S. Jobs U.S. payrolls expanded by 95,000 workers last month after a 103,000 increase in September, according to the median forecast of economists surveyed by Bloomberg News ahead of today’s data from the Labor Department. The jobless rate was 9.1 percent for a fourth consecutive month, the report may also show. The MSCI Asia Pacific Index of stocks rose 2.5 percent, its first advance this week. The 17-nation euro yesterday advanced after Papandreou scrapped a referendum on an accord with the European Union after it split his party, roiled markets and drew warnings from euro leaders that it may cost Greece its membership in the 17-nation currency area. “A referendum is now off the table and it seems that the package agreed to last week will pass through Greece’s parliament,” David Watt, a senior currency strategist at Royal Bank of Canada’s RBC Capital Markets unit in Toronto, wrote in a note to clients. “The recent shockwave has left its mark. The euro is still well below the post-EU summit high.” The euro has risen 0.3 percent in the past week, according to Bloomberg Correlation-Weighted Indexes. That trimmed its decline over the past year to 3.5 percent, the worst among the 10 developed-nation currencies tracked. The dollar fell 0.9 percent and the yen rose 1.3 percent over the same 12-month period. Greek Vote Demand for the euro was limited before Papandreou faces a confidence vote today in parliament. Greece’s largest opposition party has rebuffed his overtures to form a national government, raising the prospect of elections. Greek Finance Minister Evangelos Venizelos said early elections would endanger a financing package for the country agreed at an Oct. 26 summit and the sixth tranche of loans from last year’s bailout. “There are downside risks to euro,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia, the nation’s biggest lender. “You will still get more softening of the data in Europe and it’s easy to come up with a scenario where you get some problem in Greece or in Italy and that drags down the euro.” The euro may drop to about $1.32 by year-end, he said. ‘Mild Recession’ European Central Bank President Mario Draghi yesterday unexpectedly cut the bank’s key interest rate by a quarter- percentage point to 1.25 percent and said Europe is heading toward a “mild recession.” A euro-area composite index based on a survey of purchasing managers in the services and manufacturing industries fell to 47.2 in October from 49.1 in September, London-based Markit Economics is expected to confirm today, according to economists in a Bloomberg poll. That would be in line with an Oct. 24 initial reading and the lowest since July 2009. Australia’s dollar was set for its biggest weekly loss since September after the Reserve Bank of Australia predicted growth of 4 percent in the 12 months to June 30, 2012, down from its Aug. 5 estimate of 4.5 percent. Consumer prices will rise 2 percent over the period, compared with a previous prediction of 2.5 percent, the central bank said. The RBA cut its benchmark interest rate by a quarter- percentage point to 4.5 percent on Nov. 1. For the so-called Aussie, the revisions are “bearish, but the reaction is relatively muted given the market had already expected that would happen after the rate cut earlier this week,” said Thomas Harr, head of Asian currency strategy at Standard Chartered in Singapore. “I think the RBA has clearly shifted to an easing bias.” The Aussie weakened 0.3 percent to $1.0384, having fallen 3 percent since Oct. 28. That’s the steepest slide since the five days ended Sept. 23. The currency fell 0.4 percent to 81.02 yen. To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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