BLBG:Dollar Advances Against Most Peers Before U.S. Jobs Data
The dollar strengthened against most of its major counterparts after U.S. data fanned expectations employment figures today will point to a recovery in the world’s biggest economy.
The euro dropped for a second day before European data that may confirm the currency bloc’s manufacturing contracted for a 15th month. The yen extended weekly drops against its major peers as signs of economic weakness along with earnings disappointments at technology companies spurred speculation the Bank of Japan (8301) will expand monetary easing.
“If we get very good data out of the U.S., we might actually see people going to the U.S. dollar because, on a relative basis, the U.S. is much better” than the euro region, said Lee Sue Ann, a Treasury economist at United Overseas Bank Ltd. (UOB) in Singapore. “If we get very bad data and things are not so good, usually the dollar is also supported because it’s a safe-haven currency.”
The dollar advanced 0.3 percent to $1.2901 per euro as of 7:11 a.m. in London. The euro declined 0.1 percent to 103.59 yen. The Japanese currency fell 0.2 percent to 80.28 per dollar.
The yen has retreated 0.8 percent against the dollar since Oct. 26, set for a third weekly drop. That would be the longest stretch of losses since March 16. It has lost 0.5 percent in the past week versus the euro. The greenback was up 0.3 percent versus Europe’s common currency this week.
U.S. Employment
The MSCI Asia Pacific Index (MXAP) of stocks climbed 0.8 percent, following a 1.1 percent advance in the Standard & Poor’s 500 Index of U.S. shares yesterday.
The U.S. Labor Department is likely to say today that a net 125,000 jobs were added to payrolls last month following an increase of 114,000 in September, according to the median estimate of economists surveyed by Bloomberg News. The unemployment rate probably rose to 7.9 percent from a three-year low of 7.8 percent, a separate survey showed.
Applications for jobless benefits fell 9,000 to 363,000 in the week ended Oct. 27, the Labor Department said yesterday. A separate report from ADP Research Institute showed that companies increased payrolls in October by 158,000, the most since February.
A final reading from Markit Economics will probably confirm today that a gauge of the euro zone’s manufacturing slid to 45.3 in October from 46.1 the prior month, economists forecast. A level below 50 indicates contraction.
“We are going to continue seeing quite a bit of slowdown for Europe on the whole,” said Lee of United Overseas Bank. “We’ve seen the euro finding it very difficult to stay above the $1.30 level.”
Yen’s Slump
The euro has lost 2.6 percent this year among 10 developed- nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen has dropped 6.7 percent, the biggest loser, while the dollar slid 2.1 percent.
Osaka-based Sharp Corp. said there was “material doubt” about its ability to survive after yesterday forecasting a record full-year loss on falling demand for its display panels. Sony Corp., Japan’s biggest consumer electronics exporter, reported a seventh-straight quarterly loss while maintaining its forecast for a full-year profit.
The BOJ increased its asset-purchase program on Oct. 30 by 11 trillion yen ($137 billion) to 66 trillion yen to bolster growth through lower borrowing costs. In the previous meeting earlier last month, the central bank avoided adding to stimulus.
“The possibility could not be ruled out that the economy would be acknowledged retroactively to have entered a recessionary phase,” minutes of the earlier meeting showed today.
BOJ Outlook
“Markets are increasingly convinced that the Bank of Japan will continue to ease monetary policy till deflation is overcome, supporting the dollar-yen rate,” said Minori Uchida, Tokyo head of global market research at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest financial group by market value. “Views that the U.S. economy isn’t so bad are causing a change in market sentiment.”
Implied volatility of three-month options for Group-of- Seven currencies fell to 7.37 percent today, the lowest since October 2007, according to the JPMorgan G7 Volatility Index. A decrease in price fluctuations makes investments in currencies with higher lending rates more attractive because risk becomes smaller that market moves will erase profits on such trades.
To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
