BLBG: Dollar Weakens as Increase in U.S. Payrolls Boosts Risk Appetite
The Dollar Index (DXY) fell for a fourth day as a report showed hiring in the U.S. increased in January after accelerating more than previously estimated at the end 2012, encouraging investors to seek higher-yielding assets.
The decline came two days after the Federal Reserve said it will keep buying bonds to spur economic growth and reduce unemployment, increasing concern the dollar is being debased. The greenback fell earlier as risk appetite rose after data showed manufacturing in the 17-nation region shrank less in January than earlier estimated.
“This number suggests that the trend for stronger employment growth in the States is intact,” Jack Spitz, Toronto-based managing director of foreign-exchange trading at National Bank of Canada, said in a telephone interview “It will likely lead to better U.S. dollar strength going forward” as it encourages the Fed to end monetary stimulus, he said.
The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, declined 0.3 percent to 78.986 at 8:53 a.m. in New York. It touched 79.133 yesterday, the lowest level since Dec. 20.
The yen reached a 2 1/2 year low amid bets Prime Minister Shinzo Abe will select a new Bank of Japan governor who will boost monetary stimulus, and the euro topped $1.36 for the first time since Nov. 18, 2011.
Revised Data
Hiring increased in January after accelerating more than previously estimated at the end of 2012, data showed. Payrolls rose by 157,000 jobs following a revised 196,000 advance in the prior month and a 247,000 surge in November, Labor Department figures showed today in Washington. The revisions added a total of 127,000 jobs to the employment count in November and December.
The jobless rate rose to 7.9 percent, from 7.8 percent.
The dollar gauge dropped 1.2 percent on Aug. 3, when data showed employers added 163,000 jobs in July, exceeding a forecast of 100,000. It gained 0.2 percent Jan. 4, when a 155,000-position gain in the previous month narrowly beat a projection of 152,000.
The index climbed 0.6 percent on June 1 to touch a 21-month high of 83.542 as investors sought safety after the 69,000 positions that employers added in May failed to approach a Bloomberg survey forecast for 150,000.
The dollar fell yesterday to the weakest level since November 2011 versus the euro after the Fed said Jan. 30 it will keep purchasing $85 billion of Treasury and mortgage securities each month.
Record Stimulus
Fed Chairman Ben S. Bernanke and his Federal Open Market Committee colleagues are deploying record stimulus through an open-ended expansion of the central bank’s balance sheet after determining that the benefits from stoking a flagging economy outweigh any risk of financial instability or higher inflation.
The Fed repeated that its purchases will continue “if the outlook for the labor market does not improve substantially.” The central bank also left unchanged its statement that it planned to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and projected inflation stays below 2.5 percent.
The euro strengthened yesterday as optimism increased that the worst is over in the 17-nation bloc’s sovereign-debt crisis.
To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
