The dollar rose for a third day against the yen before a U.S. report that economists said will show employers stepped up hiring last month, pointing to a recovery in the world’s biggest economy.
The euro weakened versus 13 of its 16 major counterparts after a report confirmed the region’s manufacturing sector contracted in October. The yen headed for a third weekly decline against the U.S. currency as economic weakness and disappointing corporate earnings spurred speculation the Bank of Japan (8301) will expand monetary easing. The pound climbed to the strongest in a month against the euro.
“Squaring up ahead of the payrolls must be a factor,” said Adam Cole, global head of foreign-exchange strategy at Royal Bank of Canada in London. “In terms of dollar-euro, if you knew what the number would be, it’s hard to say how the market would react. If you were to get a good number relative to expectations, the way the market will play that more immediately would be in dollar-yen.”
The dollar rose 0.2 percent to 80.27 yen as of 7:17 a.m. in New York, extending this week’s advance to 0.8 percent. The U.S. currency gained 0.5 percent to $1.2878 per euro after reaching $1.2865, the strongest since Oct. 11. The euro declined 0.3 percent to 103.37 yen.
The U.S. Labor Department will say today employers hired 125,000 workers last month following an increase of 114,000 in September, according to the median estimate of 91 economists surveyed by Bloomberg before the report at 8:30 a.m. in Washington. The jobless rate rose to 7.9 percent from a three- year low of 7.8 percent, a separate survey showed.
Applications for jobless benefits fell 9,000 to 363,000 in the week ended Oct. 27, the Labor Department said yesterday. A report from ADP Research Institute showed that companies boosted payrolls in October by 158,000, the most since February.
“If we get very good data out of the U.S. we might actually see people going to the U.S. dollar because, on a relative basis, the U.S. is much better” than the euro area, said Lee Sue Ann, a treasury economist at United Overseas Bank Ltd. (UOB) in Singapore. “If we get very bad data and things are not so good, usually the dollar is also supported because it’s a safe-haven currency.”
A gauge of manufacturing in the 17-nation euro area dropped to 45.4 from 46.1 in September, snapping two months of advances, London-based Markit Economics said today. That compares with an initial October estimate of 45.3 published on Oct. 24. A reading below 50 indicates contraction.
The euro has weakened 2.7 percent this year, according to Bloomberg Correlation-Weighted Indexes, which tracks 10 developed-nation currencies. The yen has dropped 6.5 percent, the biggest loser, and the dollar slid 2 percent.
Commerzbank AG today raised its forecasts for the euro against the dollar through December 2013, saying weakness in the currency will be delayed.
The Frankfurt-based bank estimates the euro will trade at $1.30 by December this year, up from a previous forecast of $1.23, analysts Ulrich Leuchtmann and Ralph Solveen wrote in an e-mailed note. It will be at $1.23 by December 2013, from a previous estimate of $1.16, the analysts wrote.
The yen has declined at least 0.3 percent this week against all 16 of its major counterparts, dropping as much as 1.9 percent against the Norwegian krone and 1.4 percent versus the South Korean won.
Sharp Corp., based in Osaka, said there was “material doubt” about its ability to survive after yesterday forecasting a record full-year loss on falling demand for its display panels. Sony Corp., Japan’s biggest consumer electronics exporter, reported a seventh quarterly loss.
The BOJ increased its asset-purchase program by 11 trillion yen to 66 trillion yen on Oct. 30 to bolster growth through lower borrowing costs. In the previous meeting on Oct. 4-5, the central bank avoided adding to stimulus.
“The possibility could not be ruled out that the economy would be acknowledged retroactively to have entered a recessionary phase,” according to the minutes of Oct. 4-5 meeting released today.
“Markets are increasingly convinced that the Bank of Japan will continue to ease monetary policy until deflation is overcome,” weakening the yen, said Minori Uchida, Tokyo head of global market research at Bank of Tokyo-Mitsubishi UFJ Ltd. “Views that the U.S. economy isn’t so bad are causing a change in market sentiment.”
The pound climbed for a third day against the euro after data showed U.K. construction unexpectedly expanded in October.
A gauge based on a survey of purchasing managers rose to 50.9 last month from 49.5 in September. Economists in a Bloomberg survey forecast a decline to 49. A reading above 50 indicates expansion.
Sterling rose 0.2 percent to 80.05 pence per euro after appreciating to 79.97, the strongest level since Oct. 3. The U.K. currency weakened 0.3 percent to $1.6088.
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