Bloomberg News

Dollar Slips Against Most Counterparts on U.S. Growth Concern

June 01, 2011

June 1 (Bloomberg) -- The dollar fell against the majority of its most-traded peers before reports likely to show U.S. companies hired fewer workers and manufacturing cooled.

The Dollar Index declined before the private ADP Employers Services report is released today, followed by the non-payroll figures on June 3. The euro advanced to a three-week high versus the greenback amid speculation Greece is close to an agreement on aid to ease its debt burden. The Swiss franc strengthened as data showed retail sales rose at the fastest rate for two years.

“The markets are shifting their focus, particularly from the intense concerns over debt restructuring, and we’ve had a series of weak economic data in the U.S.,” said Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “If there’s any evidence of a considerable worsening in the employment situation, I think that would certainly hit confidence pretty significantly.”

The dollar was little changed at $1.4405 per euro as of 10:23 a.m. in London, after dropping 0.5 percent to $1.4448, the weakest since May 6. It declined 0.2 percent to 81.36 yen. The euro fetched 117.19 yen from 117.37 yesterday, when it reached 117.80, the highest since May 5.

IntercontinentalExchange Inc.’s Dollar Index, which measures the greenback against the currencies of six trading partners, was at 74.58 after declining as low as 74.39, also the lowest since May 6.

U.S. Data

Companies in the U.S. added 175,000 workers in May compared with 179,000 the prior month, according to the median estimate of 37 economists in a Bloomberg survey before the ADP report. Labor Department data on June 3 will show a 180,000 gain in payrolls compared with April’s 244,000 increase, a separate survey shows.

The Institute for Supply Management’s factory index, due today in the U.S., probably fell to 57.1 last month, the lowest since October, according to the median forecast. Readings above 50 signal expansion.

The euro pared its gains after German newspaper Frankfurter Allgemeine Zeitung reported the IMF may not pay out its fifth tranche of aid to Greece in June after officials assess the country’s progress in cutting its deficit.

“This article has caused uncertainty,” said Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen. “That said, there’s a lot of confusion in the market, because there are also reports that the IMF is willing to consider a new package to Greece.”

Swiss Retail Sales

The 17-member common currency earlier reached the highest level in more than a week against the U.K. currency as Kathimerini newspaper reported Greece is close to an agreement with the European Commission, ECB and the IMF on a fiscal plan and privatization program, citing people close to Prime Minister George Papandreou. Details are expected to be settled by tonight or tomorrow morning, the newspaper said.

Luxembourg Prime Minister Jean-Claude Juncker said May 30 that the euro region’s leaders will likely decide on a new aid package by the end of June and have ruled out a “total restructuring” of Greece’s debt.

The Swiss franc advanced against all 16 of its major counterparts as a report showed retail sales climbed 7.5 percent in April, boosting speculation the Swiss National Bank may raise borrowing costs. Separate data showed the SVME purchasing managers index rose to 59.2 in May from 58.4 in April, beating a median forecast of a decline to 57.5.

The franc gained 0.6 percent to 1.2221 per euro. It reached 1.2102 on May 27, the strongest on record, according to data compiled by Bloomberg. The Swiss currency appreciated 0.7 percent to 84.80 centimes per dollar.

Pound, Aussie

The pound slid amid concern about the strength of the U.K.’s economic recovery after data showed manufacturing and mortgage approvals slumped.

The British currency slipped 0.2 percent to $1.6419, after earlier advancing as much as 0.3 percent. It depreciated 0.3 percent to 87.77 pence per euro.

Australia’s dollar rose after the statistics bureau said gross domestic product contracted 1.2 percent in the first quarter from the previous three months. The lowest estimate in a Bloomberg News survey was for a 2 percent contraction.

“The GDP number wasn’t as bad as some in the market were expecting,” said Derek Mumford, a Sydney-based director at Rochford Capital, a foreign exchange and interest-rate risk management firm. “We’re certainly seeing a bit of a rally in the Aussie dollar.”

The so-called Aussie climbed 0.5 percent to $1.0729 and gained 0.3 percent to 87.26 yen.

--With assistance from Candice Zachariahs in Sydney, Masaki Kondo and Ron Harui in Singapore. Editors: Keith Campbell, Mark McCord.

To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.


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