The dollar was near a one-week high versus the Swiss franc before a U.S. report that economists said will show initial jobless claims fell, easing speculation the Federal Reserve will introduce new stimulus measures.
The yen pared earlier gains after a Japanese government official expressed concern over the currency’s recent strength. New Zealand’s dollar dropped against all its major counterparts after the jobless rate climbed more than economists forecast, backing the case for the central bank to slow the pace of interest-rate increases.
“The market has probably got ahead of itself on the Fed and quantitative easing,” said Robert Rennie, head of currency research at Westpac Banking Corp. in Sydney. “The dollar can bounce through payrolls and into the Fed next week.”
The dollar traded at 1.0524 francs as of 7:06 a.m. in London from 1.0531 francs yesterday, when it rose to 1.0555, the strongest since July 29. The U.S. currency was at 86.20 yen from 86.27 yen, and bought $1.3163 per euro from $1.3161. The yen traded at 113.51 per euro from 113.54, after earlier rising as high as 113.12.
U.S. initial jobless claims fell to 455,000 last week from 457,000 the previous period, according to a Bloomberg survey before today’s Labor Department. Employment at companies rose by 90,000 in July after increasing by 83,000 in June, according to economists surveyed before tomorrow’s Labor Department report.
“A more constructive payrolls number tomorrow will weaken the yen,” said Westpac’s Rennie, who expect gains in the dollar to be capped near 88 yen.
Japan’s currency erased an earlier advance of as much as 0.3 percent against the greenback after Trade Minister Masayuki Naoshima said “we need some kind of response” to counter the rising yen and alleviate risks to companies posed by a strengthening currency.
“We’ve had Japan’s trade minister say that the yen rise might prompt some action and that could well put a floor under dollar-yen for the day,” said Sue Trinh, a senior currency strategist in Hong Kong at Royal Bank of Canada, the nation’s biggest lender.
European Central Bank and Bank of England will both keep their benchmark rates at record low levels today, according to Bloomberg News surveys.
“The market continues to be a little jittery about the stability of the global expansion,” said Robert Minikin, a senior foreign-exchange strategist at Standard Chartered Plc in Hong Kong. “We’ve seen a powerful compression in interest-rates spreads, with rates falling towards Japanese levels in many markets, and in that environment” may cap the dollar’s gains.
The New Zealand dollar fell for the first time in five days against the U.S. currency after a government report showed the jobless rate increased more than economists forecast.
The unemployment rate rose to 6.8 percent from 6 percent in the previous three months, Statistics New Zealand said in Wellington. Economists in a Bloomberg News survey estimated a 6.2 percent rate.
“The New Zealand dollar dropped sharply this morning following the higher-than-expected unemployment rate result,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “We saw last week the central bank move toward a slightly less hawkish stance and I think this is another piece of data, which picks up that stance.”
The New Zealand dollar weakened 0.8 percent to 72.93 U.S. cents, and dropped 0.8 percent to 62.88 yen.