Dec. 5 (Bloomberg) -- The dollar headed for a fifth weekly drop against the yen before a U.S. government report that may show the unemployment rate rose to the highest level since 1993, giving the Federal Reserve more reason to ease monetary policy.

The U.S. currency was little changed against the yen today. The euro weakened versus the dollar after a report showed German factory orders tumbled in October. The ruble dropped to near the lowest in three years against the dollar after Russia’s central bank widened the currency’s trading band as the price of Urals crude, the country’s main export, fell below $40 a barrel.

“The de-leveraging process is now entering its final stages and the markets will begin to focus on what Fed easing will mean for the dollar, something which we believe will be egative,” said Kamal Sharma, a currency strategist in London at JPMorgan Chase & Co. “We see scope for broader-based dollar weakness in 2009.”

The dollar bought 92.24 yen as of 7:19 a.m. in New York, from 92.23 yen yesterday, bringing its drop this week to 3.4 percent. It rose to $1.2693 against the euro, from $1.2777 and was little changed from $1.2691 at the end of last week. The euro bought 117.03 yen, down 3.5 percent from Nov. 28.

Sharma advised clients to sell the dollar and the pound against the yen. The dollar may fall to $1.35 against the euro during 2009 and to 87 yen by the end of March, he said.

The Russian ruble slid as much as 1.2 percent to 28.1207 per dollar today, the weakest since February 2006. It traded at 35.9162 per euro, the lowest since Oct. 3.

U.S. Payrolls

U.S. payrolls shrank by 333,000 workers in November after a drop of 240,000 in the previous month, according to the median forecast of 73 economists surveyed by Bloomberg News. The jobless rate jumped to 6.8 percent, the highest level in 15 years, a separate survey showed. The Labor Department will release the report at 8:30 a.m. in Washington.

Fed Chairman Ben S. Bernanke yesterday urged the use of more taxpayer funds to prevent home foreclosures in a speech in Washington. He said on Dec. 1 he may use less conventional policies, such as buying Treasury securities, to revive the economy.

Futures on the Chicago Board of Trade showed 64 percent odds yesterday the Fed will lower its 1 percent target rate to 0.25 percent by its next meeting on Dec. 16, compared with a 52 percent chance on Dec. 3.

“The market’s attention will be drawn to non-farm payrolls, ” Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland Plc in Tokyo and a former Bank of Japan currency trader, wrote in a research note today. “This may cause stocks to fall and place pressure on the yen to rise.”

Yen Gains

Japan’s currency may rise to 85 by March 31, he said.

The yen has been the best performer against the dollar and the euro this year out of all the currencies tracked by Bloomberg as investors pared so-called carry trade purchases of higher-yielding assets. Japan’s benchmark rate is the lowest among major economies, making it a popular funding currency.

Some people are buying the yen because they view it as a relatively safe currency, Japanese Economic and Fiscal Policy Minister Kaoru Yosano told reporters at a briefing today. The currency has gained 21 percent against the dollar and 38 percent versus the euro this year.

Rate Cuts

The ECB lowered its main refinancing rate by 0.75 percentage point to 2.5 percent yesterday. The Bank of England cut its benchmark rate by a full percentage point to 2 percent.

“The beneficiary out of all these rate cuts is the yen,” said Toru Umemoto, chief currency analyst in Tokyo at Barclays Capital, a unit of Britain’s second-biggest lender. “Japan’s rates are already 0.3 percent, and they’re not going to decline further. The yen is the safest among major currencies because the financial crisis has largely excluded Japan.”

The euro fell versus the dollar as a report showed manufacturing orders in Germany slumped in October, dropping 6.1 percent adjusted for seasonal swings and inflation, as European demand for plant and machinery collapsed. They dropped 8.3 percent in September, the Economy Ministry in Berlin said today.

Russia’s Bank Rossii widened the currency band today. The central bank drained a quarter of the nation’s foreign-currency reserves and raised interest rates twice last month to arrest a 17 percent drop in the currency since August.

Russian Action

“Given oil is already below $40 a barrel we can’t rule out more depreciation,” said Evgeny Gavrilenkov, chief economist at Troika Dialog in Moscow, Russia’s oldest investment bank. “Any further devaluation depends on oil.”

The central bank buys and sells foreign currency to keep the ruble within a target trading band, which is managed against a basket of dollars and euros. Policy makers have widened the corridor four times since Nov. 11.

Urals crude, Russia’s main oil export blend, slid to $39.3 a barrel yesterday, the lowest in three years.

To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net;

Last Updated: December 5, 2008 07:22 EST