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Dollar Falls Versus Euro as U.S. Loses More Jobs Than Forecast
By Jamie McGee
Nov. 7 (Bloomberg) -- The dollar fell for the first time in three days against the euro as the U.S. unemployment rate climbed to the highest level since 1994, indicating the financial crisis is taking a sustained toll.
The U.S. currency was headed for a weekly loss against the yen on concern the world's largest economy will contract even as the Federal Reserve increased buying assets and providing loans to ease the credit crunch.
``The weakness in the economy continues,'' said Adam Boyton, a senior currency strategist in New York at Deutsche Bank AG, the world's largest currency trader.
The dollar depreciated 0.2 percent to $1.2736 per euro at 9:49 a.m. in New York, from $1.2715 yesterday, and was headed for a weekly loss of 0.2 percent. The dollar traded at 97.74 yen, compared with 97.75, and fell 0.8 percent this week. The 15-nation euro increased 0.2 percent to 124.53 yen from 124.29.
U.S. employers eliminated 240,000 jobs last month after shedding 284,000 positions in September, the Labor Department reported today in Washington. The median forecast of 78 economists surveyed by Bloomberg News was for a decline of 200,000 in October. The unemployment rate increased to 6.5 percent from 6.1 percent in the previous month.
The number of Americans receiving unemployment benefits surged to the highest level since 1983, the Labor Department reported yesterday. A total of 3.843 million workers got unemployment-insurance checks in the week ended Oct. 25, up 122,000 from the prior week.
Fed Lending
The Fed has doubled its balance sheet to $1.97 trillion in the past year to increase its capacity to support asset values and provide dollar liquidity in major economies such as Europe and Japan as well as emerging markets including Brazil, Mexico, South Korea and Singapore.
Canada's dollar was headed for a 2.2 percent weekly gain against the greenback after the government reported that the nation's employers unexpectedly added jobs in October. The loonie rose 1.2 percent to C$1.1830 per U.S. dollar today.
The South Korean won rose 0.2 percent to 1,328.65 per dollar, paring its weekly decline to 2.9 percent, as local stocks rebounded following the Bank of Korea's decision to cut its benchmark rate to 4 percent, the third reduction in a month.
The euro fell against the dollar, yen and pound yesterday after European Central Bank President Jean-Claude Trichet said the economy ``weakened significantly'' and the International Monetary Fund cut growth forecasts for the region.
ECB Rate
The ECB reduced its main refinancing rate by a half- percentage point to 3.25 percent and Trichet said more reductions may follow. The Bank of England unexpectedly lowered its rate by 1.5 percentage point to 3 percent.
The ECB also reduced the benchmark rate by a half- percentage point on Oct. 8, joining the Fed, the Bank of England, the Bank of Canada and the Swiss National Bank in coordinated cuts. Benchmark rates are 1 percent in the U.S. and 0.3 percent in Japan.
Japan will benefit from a strong yen because it will hold down prices for raw materials, said Eisuke Sakakibara, formerly the nation's top currency official, in an interview on Bloomberg Television in Singapore yesterday.
``I still believe a strong yen is in the national interest of Japan, particularly in this situation when raw material prices will increase,'' Sakakibara said.
The yen may strengthen to 80 per dollar as trades in which investors get funds in countries with low borrowing costs and buy higher-yielding assets elsewhere unwind, said Sakakibara, who was dubbed ``Mr. Yen'' during his 1997-1999 tenure at the Finance Ministry because of his influence over currency markets. Japan's target rate is the lowest in the industrialized world.
The yen's 15 percent increase against the dollar this year and 32 percent advance versus the euro prompted Finance Minister Shoichi Nakagawa to say last week that the government was ready to act as needed to limit the gains.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXxMRbeJxxeo&refer=home
By Jamie McGee
Nov. 7 (Bloomberg) -- The dollar fell for the first time in three days against the euro as the U.S. unemployment rate climbed to the highest level since 1994, indicating the financial crisis is taking a sustained toll.
The U.S. currency was headed for a weekly loss against the yen on concern the world's largest economy will contract even as the Federal Reserve increased buying assets and providing loans to ease the credit crunch.
``The weakness in the economy continues,'' said Adam Boyton, a senior currency strategist in New York at Deutsche Bank AG, the world's largest currency trader.
The dollar depreciated 0.2 percent to $1.2736 per euro at 9:49 a.m. in New York, from $1.2715 yesterday, and was headed for a weekly loss of 0.2 percent. The dollar traded at 97.74 yen, compared with 97.75, and fell 0.8 percent this week. The 15-nation euro increased 0.2 percent to 124.53 yen from 124.29.
U.S. employers eliminated 240,000 jobs last month after shedding 284,000 positions in September, the Labor Department reported today in Washington. The median forecast of 78 economists surveyed by Bloomberg News was for a decline of 200,000 in October. The unemployment rate increased to 6.5 percent from 6.1 percent in the previous month.
The number of Americans receiving unemployment benefits surged to the highest level since 1983, the Labor Department reported yesterday. A total of 3.843 million workers got unemployment-insurance checks in the week ended Oct. 25, up 122,000 from the prior week.
Fed Lending
The Fed has doubled its balance sheet to $1.97 trillion in the past year to increase its capacity to support asset values and provide dollar liquidity in major economies such as Europe and Japan as well as emerging markets including Brazil, Mexico, South Korea and Singapore.
Canada's dollar was headed for a 2.2 percent weekly gain against the greenback after the government reported that the nation's employers unexpectedly added jobs in October. The loonie rose 1.2 percent to C$1.1830 per U.S. dollar today.
The South Korean won rose 0.2 percent to 1,328.65 per dollar, paring its weekly decline to 2.9 percent, as local stocks rebounded following the Bank of Korea's decision to cut its benchmark rate to 4 percent, the third reduction in a month.
The euro fell against the dollar, yen and pound yesterday after European Central Bank President Jean-Claude Trichet said the economy ``weakened significantly'' and the International Monetary Fund cut growth forecasts for the region.
ECB Rate
The ECB reduced its main refinancing rate by a half- percentage point to 3.25 percent and Trichet said more reductions may follow. The Bank of England unexpectedly lowered its rate by 1.5 percentage point to 3 percent.
The ECB also reduced the benchmark rate by a half- percentage point on Oct. 8, joining the Fed, the Bank of England, the Bank of Canada and the Swiss National Bank in coordinated cuts. Benchmark rates are 1 percent in the U.S. and 0.3 percent in Japan.
Japan will benefit from a strong yen because it will hold down prices for raw materials, said Eisuke Sakakibara, formerly the nation's top currency official, in an interview on Bloomberg Television in Singapore yesterday.
``I still believe a strong yen is in the national interest of Japan, particularly in this situation when raw material prices will increase,'' Sakakibara said.
The yen may strengthen to 80 per dollar as trades in which investors get funds in countries with low borrowing costs and buy higher-yielding assets elsewhere unwind, said Sakakibara, who was dubbed ``Mr. Yen'' during his 1997-1999 tenure at the Finance Ministry because of his influence over currency markets. Japan's target rate is the lowest in the industrialized world.
The yen's 15 percent increase against the dollar this year and 32 percent advance versus the euro prompted Finance Minister Shoichi Nakagawa to say last week that the government was ready to act as needed to limit the gains.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXxMRbeJxxeo&refer=home
