BLBG: Dollar Falls to One-Week Low Versus Euro on U.S. Job Losses
The dollar fell to a one-week low against the euro after a report showed the U.S. unemployment rate rose to the highest level in more than 25 years.
“There are signs now in the market that the dollar is becoming more vulnerable,” said Lee Hardman, a London-based currency strategist at Bank of Tokyo-Mitsubishi Ltd., before the report’s release.
The dollar declined 1.5 percent to $1.2728 per euro at 8:35 a.m. in New York, from $1.2540 yesterday. The yen gained 1 percent to 97.08 per dollar from 98.07. The yen weakened 0.4 percent to 123.53 versus the euro from 123.
The U.S. currency appreciated 1.1 percent versus the euro in February, its second straight monthly gain, as investors sought refuge from global economic turmoil. The dollar strengthened 4.4 percent in 2008.
Employers eliminated 651,000 jobs last month, following a reduction of 655,000 in January, the Labor Department reported today in Washington. The median forecast of economists surveyed by Bloomberg News was for a decrease of 650,000. The jobless rate increased to 8.1 percent, the highest level since December 1983, from 7.6 percent in the previous month.
The unemployment rate may eventually exceed 10 percent, said Martin Feldstein, a Harvard University economics professor and former adviser to President Ronald Reagan, in a January interview on Bloomberg Television.
Jobless Claims
More than 600,000 Americans filed claims for jobless benefits for a fifth straight week, the worst performance since 1982, the Labor Department reported yesterday.
“Labor market conditions may have worsened further in recent weeks,” Federal Reserve Chairman Ben S. Bernanke said in testimony before the Senate Budget Committee this week.
The dollar fell 0.7 percent against the euro when the Labor Department last reported job losses on Feb. 6. Demand for the safety of the greenback dropped on bets congressional passage of a U.S. economic stimulus package was imminent. President Barack Obama signed the bill into law on Feb. 17.
Investors have been “increasingly disinclined” to trade currencies on the day the Labor Department releases its payrolls report, contributing to the dollar’s “erratic” response to the data, according to a note by Citigroup Inc. on Jan. 7.
“Payroll days, after the initial knee jerk, have actually been relatively low net-movement days for the dollar,” said Ron Leven, strategist at Morgan Stanley in New York, yesterday.
