By Lukanyo Mnyanda and Yasuhiko Seki Dec. 4 (Bloomberg) -- The dollar fell, headed for a second week of losses against the euro, before a U.S. report forecast to show the nation’s job losses slowed last month, spurring demand for higher-yielding assets. The U.S. currency approached a 16-month low versus the euro today as the Bundesbank upgraded its growth forecasts for Germany, a day after the European Central Bank outlined the first steps toward exiting stimulus measures. The yen was set to end five weeks of gains versus the dollar as Japanese officials said the currency should weaken. Japan’s currency headed for the biggest weekly loss in four months against New Zealand’s dollar. “Investors have decided it’s worth sticking with the rally in riskier assets and the downtrend in the dollar is still on track,” said Neil Mellor, a currency strategist in London at BNY Mellon Corp. “People are waiting for the jobs data and if it’s a positive number, the dollar will suffer more.” The dollar was at $1.5063 as of 6:21 a.m. in New York, from $1.5053 yesterday, bringing its loss this week to 0.5 percent. The yen was at 133.01 per euro from 132.87 yesterday, leaving it 2.6 percent weaker over the past five days. The dollar bought 88.31 yen, from 88.26 yesterday. The Labor Department will probably say 125,000 Americans lost jobs in November after a 190,000 decline in October, while the unemployment rate held at 10.2 percent, according to median forecasts of about 80 economists in Bloomberg surveys. Geithner Sees ‘Healing’ The world’s largest economy is healing, U.S. Treasury Secretary Timothy Geithner said in an interview yesterday on Fox Business Network. The New York Federal Reserve’s Brian Sack, head of the markets group, said the central bank’s purchases of $1.75 trillion of Treasury, housing agency and mortgage-backed securities seem to be having the “desired effects” in lowering long-term interest rates. The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency against those of six major trading partners, fell 0.1 percent to 74.704. The yen headed for its biggest weekly decline against the dollar since August as Japanese policy makers signaled they wanted the currency to weaken after it climbed to a 14-year high on Nov. 27, endangering the nation’s export-led recovery. “It would be good for the yen to weaken a little more,” Japanese Deputy Prime Minister Naoto Kan said in Tokyo today. The yen traded at 63.96 per New Zealand dollar from 63.70 in yesterday, when it weakened to 64.11, the lowest level since Nov. 25. The currency has fallen 3.7 percent this week, the most since the five days through Aug. 7. BOJ Measures The Bank of Japan announced this week an enhanced credit easing facility in which it will provide 10 trillion yen ($113.5 billion) in three-month loans to banks, joining the government’s efforts to tackle deflation, the rising yen and falling stocks. “Japan is experiencing deflation and the central bank is taking steps to fight it,” You-Na Park, an analyst at Commerzbank AG in Frankfurt, wrote in a client note. “Should the strength of the yen continue, the BOJ will not have any choice but to intervene.” The euro rose the most against the Norwegian krone before ECB Executive Board member Lorenzo Bini Smaghi speaks in London today. The ECB, which kept its main refinancing rate at 1 percent yesterday, will conduct the last of its 12-month refinancing operations this month as its starts winding down liquidity injections for banks, central bank President Jean- Claude Trichet said. The final six-month operation will be in March, he said. Bundesbank Growth Forecast The outlook for the next two years has “brightened perceptively,” the Bundesbank said today. Gross domestic product will rise 1.6 percent next year and 1.2 percent in 2011 after dropping 4.9 percent this year, the Frankfurt-based central bank said in its bi-annual economic outlook today. In June, it predicted the economy would stagnate in 2010 after contracting 6.2 percent in 2009. “The markets are perceiving the ECB’s latest move as hawkish, with the central bank likely to do more over the next year,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “This will probably enhance the trend for the euro to appreciate.” To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net

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