By Oliver Biggadike and Catarina Saraiva July 2 (Bloomberg) -- The dollar fell against the euro after U.S. data showed the world’s largest economy shed jobs in June for the first time this year, reflecting a drop in federal census workers and a smaller-than-forecast gain in private hiring. “People were fearing it would be much worse,” said Sebastien Galy, a currency strategist at BNP Paribas SA in New York. “The first reaction is one of relief.” The greenback weakened 0.6 percent to $1.2605 per euro and was little changed at 87.58 yen at 8:50 a.m. in New York. The yen earlier fell against most major counterparts as Australia’s government reduced a proposed tax on mining companies, spurring demand for higher-yielding assets. The Japanese currency touched a seven-month high against the greenback yesterday on speculation the U.S. economy may be slow to recover. “The mining tax announcement offered respite for high- yielding currencies and weighed on the yen,” said Neil Mellor, a strategist at Bank of New York Mellon Corp. in London. ‘Up Too Fast’ The euro fell earlier after gaining as much as 2.5 percent yesterday against the dollar, the most on an intraday day basis since May 10, amid signs that funding pressures were easing on European financial institutions. “It’s come up too fast,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “So, we’ll see the euro drop back a little bit lower.” The single currency may strengthen in the near term against the dollar as bond yields advance, according to Royal Bank of Scotland Group Plc. “We remain bearish longer term, but it is time to be tactically square against the dollar, and possibly long for more aggressive short-term trading purposes,” Greg Gibbs, an RBS strategist in Sydney, wrote today in a report. The Aussie rose for a second day versus the greenback, advancing 0.3 percent to 84.62 U.S. cents as Australian Prime Minister Julia Gillard scaled back a proposed tax on mining companies to win their support. ‘Positive for Australia’ The government exempted most commodities, raised the threshold and cut the tax to 30 percent on coal and iron ore earnings, compared with a previous plan to collect 40 percent of all resource profits. “The mining tax agreement is obviously a positive for Australia,” said Tony Allen, head of currency trading at ANZ National Bank Ltd. in Wellington, New Zealand. Benchmark interest rates are 4.5 percent in Australia and 2.75 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. --With assistance from Keith Jenkins in London, Candice Zachariahs in Sydney and Frances Yoon in Seoul. Editors: Greg Storey, Dave Liedtka To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net. To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net.

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