Bloomberg News

Dollar Index Little Changed as Jobs Report Spurs Bets on Fed

November 04, 2011

Nov. 4 (Bloomberg) -- The Dollar Index was little changed after U.S. employers added fewer jobs in October than forecast, fueling bets the Federal Reserve may take further steps to boost the economy, debasing the currency.

The gauge of the dollar versus six major counterparts declined two days after the Fed kept the door open to a third round of debt purchases to spur growth. It said while the economy picked up in the third quarter, unemployment and growth were unsatisfactory. The euro rose 0.3 percent to $1.3860.

The jobs report “revives some of those comments on speculation of what more could the Fed do; it keeps that on the table and is a negative for the dollar,” said Carl Forcheski, a director on the corporate currency sales desk at Societe Generale SA in New York. “Downside risks to the economy continue, they will continue for a while.”

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against six currencies including the euro and yen, fell less than 0.1 percent to 76.660 at 8:35 a.m. New York time. It touched 74.724 Oct. 27, the lowest since Sept. 6, and reached 77.676 on Nov. 1, the highest level since Oct. 12.

The euro erased earlier gains versus the greenback after German Chancellor Angela Merkel told reporters Group of 20 leaders meeting in the French resort of Cannes failed to agree on International Monetary Fund resources.

The U.S. currency was poised for a weekly advance against the euro amid concern Greece is headed for default and the sovereign-debt crisis will cause euro-area growth to contract. The Swiss franc declined after central bank Governing Board member Jean-Pierre Danthine said the currency remains “high” and policy makers are ready to weaken it further.

Nonfarm Payrolls

U.S. employment climbed in October at the slowest pace in four months, illustrating the “frustratingly slow” progress cited by Federal Reserve Chairman Ben S. Bernanke this week. The 80,000 increase in payrolls was less than forecast and followed gains in the prior two months that were revised up by 102,000, Labor Department figures showed today in Washington.

The unemployment rate fell to a six-month low of 9 percent from 9.1 percent even as the labor force expanded.

The Fed said Nov. 2 after a policy meeting that, while “significant downside risks” remain, the economy picked up “somewhat” in the third quarter. Gross domestic product accelerated at a 2.5 percent annualized pace from July through September, the fastest in a year, Commerce Department figures showed on Oct. 27. Consumers spending increased 0.6 percent in September, a separate report showed.

Last Report

The Dollar Index fell as much as 0.7 percent on Oct. 7 after data showed payrolls in September increased by 103,000 jobs, exceeding the 60,000 gain forecast in a Bloomberg survey and spurring appetite for higher-yielding assets. The gauge rose 0.2 percent on Sept. 2, when the government said job growth unexpectedly stalled in August. A Bloomberg survey had forecast an increase of 68,000 positions.

G-20 leaders have agreed on an action plan to bolster economic growth, Merkel said. The G-20 reaffirmed debt and deficit goals as all G-20 leaders have an interest in a stable euro area, Merkel told reporters today.

Greek Prime Minister George Papandreou struggled to retain power after the largest opposition party rejected his offer to form a national government, raising the prospect of elections that may delay aid needed to prevent default.

Opposition leader Antonis Samaras rebuffed sharing power with Papandreou and called on the premier to step down.

--Editors: Greg Storey, Dave Liedtka

To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Allison Bennett in New York at abennett23@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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