Jan. 4 (Bloomberg) -- The dollar headed for a second weekly decline before a government report that economists said will show U.S. jobs growth slowed in December.

The U.S. currency traded near the lowest in a month versus the euro as investors increased bets the Federal Reserve will cut interest rates in January by as much as a half-percentage point from 4.25 percent. The British pound was set for a third weekly drop against the single European currency on concern the spread of credit-market losses will cool global economic growth and also prompt the Bank of England to lower borrowing costs.

``The dollar will remain under pressure,'' said Jan Lambregts, head of Asia research in Hong Kong at Rabobank International. ``On a 12-month horizon, the markets are looking for a Fed Funds rate at 3 percent, so they have a fairly negative scenario.''

The dollar traded at $1.4726 per euro as of 7 a.m. in London from $1.4750 late in New York yesterday, when it reached $1.4781, the weakest since Nov. 30. It was also at 109.21 yen after touching 108.25 yesterday, the lowest since Nov. 27.

Rabobank forecasts the dollar at 108 yen by year-end, Lambregts said, compared with the median estimate in a Bloomberg News survey of 110.

Japan's currency traded at 160.83 per euro from 161.21 yesterday, when it reached 159.76, the highest since Nov. 27. It was at 215.16 versus the British pound from 215.49 and traded at 110.87 per Canada's dollar from 110.47, and 84.24 against New Zealand's dollar from 84.23.

Futures Bets

The dollar may fall for a seventh day against the yen, the longest stretch in more than three years, before the Labor Department report that will show U.S. employers added 70,000 jobs, compared with 94,000 in November, according to the median forecast of 74 economists surveyed by Bloomberg. The unemployment rate is expected to rise to 4.8 percent, the highest in more than a year. The report is due at 8:30 a.m. Washington time.

``We will have more negative data coming out of the U.S., said Thomas Harr, senior currency strategist at Standard Chartered Plc in Singapore, in an interview with Bloomberg Television. ``The dollar will weaken further.''

Against the dollar, the pound traded at $1.9711 from $1.9710 and the Swiss franc was at 1.1119 from 1.1109. The pound was at 74.70 pence per euro, after reaching 74.84, the lowest since the common European currency's introduction in 1999.

Traders see 100 percent odds the Fed will cut the target rate for overnight lending between banks by at least a quarter- percentage point to 4 percent at its Jan. 30 meeting, according to futures contracts on the Chicago Board of Trade. The chances of a half-point reduction are 34 percent, compared with 24 percent on Jan. 2 and no chance a week ago.

Japanese Importers

Losses in the dollar were limited on speculation Japanese importers bought the currency to pay their bills at the start of the new year.

The dollar fell to a five-week low of 108.25 yen yesterday, making it cheaper to buy the currency now instead of last month, when it averaged 112.41 yen and rose to a seven-week high of 114.66 yen.

``We're likely to see some importers enter the market to purchase dollars,'' said Hiroshi Yoshida, foreign-exchange trader in Tokyo at Shinkin Central Bank, Japan's fifth-largest publicly traded lender by assets. ``The dollar staged a slight recovery last month, so some Japanese companies missed their chance to buy it then. It's at a more attractive level now.''

The dollar may rise to 110.50 yen today, he forecast.

The euro may gain on speculation record oil prices will accelerate inflation in the 15 nations that share the currency, putting pressure on the European Central Bank to raise interest rates.

Europe's Inflation

Inflation in the euro region held at a 6 1/2-year high of 3.1 percent in December, according to a Bloomberg survey before the European Union's statistics office issues the data at 11 a.m. in Luxembourg.

``I expect the euro to maintain a rising trend against the dollar,'' said Kenta Inoue, economist and currency analyst in Tokyo at Mitsubishi UFJ Securities, a unit of Japan's largest publicly traded lender. ``Oil prices may increase inflationary pressure in Europe, and this could eventually fuel expectations that rates may have to rise.''

The euro may climb to $1.50 by year-end, he said.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Stanley White in Tokyo at swhite28@bloomberg.net

Last Updated: January 4, 2008 02:08 EST