Dollar Weakens to Four-Month Low Versus Euro Before Jobs Data

by
March 4, 2011

March 4 (Bloomberg) — The dollar fell to its weakest level in four months against the euro as stock markets rose before a report that may show U.S. employers added the most jobs since May, curbing demand for the currency as a haven.

The euro headed for a third straight weekly increase against the greenback, the longest run of gains since October, after European Central Bank President Jean-Claude Trichet said yesterday the ECB may increase interest rates at its next meeting. Sterling declined against the dollar after house prices fell in February, fueling concern that the economic recovery won’t be sustained.

“There’s already decent risk appetite out there and a good number would propel that further,” said Jane Foley, a senior currency strategist at Rabobank Group in London. As the jobs data is unlikely to “significantly alter expectations” on U.S. rates, it “won’t be sufficient to turn the trend around for the dollar,” she said.

The dollar was at $1.3970 per euro as of 6:30 a.m. in New York, from $1.3969 yesterday. It earlier today depreciated to $1.3977, the weakest level since Nov. 9. The dollar traded at 82.60 yen, from 82.44. The euro bought 115.35 yen, from 115.16 yesterday and 112.35 a week ago.

U.S. nonfarm payrolls increased by 196,000 in February, according to the median estimate of economists surveyed by Bloomberg News before today’s Labor Department report. U.S. initial jobless claims unexpectedly fell last week to the lowest level in more than two years and service industries expanded more than forecast last month, data published yesterday showed.

Rate Bets Increased

The MSCI Asia Pacific Index gained 1 percent, leaving it 1.8 percent higher for the week, while the Stoxx Europe 600 Index added 0.5 percent. U.S. stock-index futures rose.

To read more, visit: http://www.businessweek.com/news/2011-03-04/dollar-weakens-to-four-month-low-versus-euro-before-jobs-data.html

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