BLBG: Dollar Rises to Three-Week High as Job Cuts Reduce Risk Demand
By Matt Townsend and Ye Xie
Oct. 2 (Bloomberg) -- The dollar advanced to a three-week high against the euro after the U.S. payrolls report showed employers eliminated more jobs in September than economists forecast, discouraging demand for higher-yielding assets.
“The market doesn’t like the number,” said Ron Leven, executive director at Morgan Stanley in New York. “In an environment where the dollar is so broadly used as a funding currency, bad news is generally dollar-supportive.”
The dollar appreciated 0.2 percent to $1.4514 per euro at 8:47 a.m. in New York, from $1.4545 yesterday. It touched $1.4481, the strongest level since Sept. 9. The U.S. currency traded at 89.16 yen, compared with 89.60. The euro was at 129.45 yen, compared with 130.35.
Employers eliminated 263,000 jobs in September after a revised reduction of 201,000 in the previous month, the Labor Department reported today in Washington. The median forecast of 84 economists surveyed by Bloomberg News was for a decrease of 175,000. The unemployment rate rose to 9.8 percent.
Goldman Sachs Group Inc. changed its forecast for payrolls yesterday to show larger cuts, citing “disappointing” economic data, including the number of people receiving jobless benefits. Employers probably cut payrolls by 250,000 last month, New York- based chief U.S. economist Jan Hatzius said in a note to clients. Goldman Sachs had estimated 200,000 job losses.
The number of Americans filing first-time claims for unemployment benefits increased to 551,000 in the week ended Sept. 26, from a revised 534,000 in the previous week, the Labor Department reported yesterday.
Dollar Index
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, fell 0.4 percent on Sept. 4 on speculation demand for riskier assets increased as the payrolls report showed job losses slowed in August.
The euro was headed for a second week of declines versus the dollar on speculation Group of Seven finance officials meeting in Istanbul this weekend will discuss the European currency’s 4.3 percent rally in 2009.
Europe’s currency fell yesterday after European Central Bank President Jean-Claude Trichet said after a meeting of euro- area finance ministers that “disorderly movements” in exchange rates have “adverse implications.” Federal Reserve Chairman Ben S. Bernanke said at a House Financial Services Committee hearing that he doesn’t see an “immediate risk” to the dollar’s status as the world’s main reserve currency.
