Dollar Rises on Signs U.S. Labor Market is Improving; Aussie Dollar Slides

The dollar traded near a nine-week high against the yen before a U.S. report that may show payrolls expanded for a second month, adding to signs the recovery of the world’s largest economy is gathering momentum.

The greenback gained against 11 of its 16 major peers as military tensions on the Korean peninsula supported demand for safe-haven assets. Australia’s dollar dropped after data showed retail sales unexpectedly fell. Taiwan’s dollar surged on prospects global funds will buy more of the island’s assets.

“Recent good economic data are supportive of the dollar,” said Takayuki Asahara, a dealer in Tokyo at Shinkin Central Bank, the central institution for Japan’s financial cooperatives. “Further gains can be expected should the job data tomorrow be positive.”

The dollar traded at 84.09 yen as of 6:47 a.m. in London from 84.19 in New York yesterday. It reached 84.41 yen on Nov. 29, the highest level since Sept. 27. The greenback was little changed at $1.3139 per euro, after climbing as high as $1.3088. The euro was at 110.49 yen from 110.58 yen.

U.S. employers added 145,000 workers last month after a 151,000 gain in October, according to a Bloomberg News survey of economists before the Labor Department report tomorrow.

The Federal Reserve’s Beige Book showed yesterday hiring improved, manufacturing expanded and retailers anticipated a stronger holiday shopping season. ADP Employer Services reported yesterday employment increased by 93,000 last month, the most since November 2007. The median projection of economists in another Bloomberg survey was for a 70,000 gain.

The dollar has risen 4 percent over the past month, according to Bloomberg Correlation-Weighted Indexes. The yen has fallen 0.8 percent and the euro declined 3.6 percent.

Korean Tensions

North Korea may attack the province that surrounds Seoul, the Tokyo Shimbun newspaper said, citing an unidentified person who quoted an official in the communist nation. South Korea will hold artillery drills on Yeonpyeong, the island shelled by the North last week, on Dec. 6, television broadcaster MBN reported today, citing government officials it didn’t identify.

Japan and the U.S. will conduct a joint military exercise from tomorrow until Dec. 10, the Joint Staff of the Japan Self- Defense Forces said in a statement.

“Geopolitical risk appears to be returning a bit on worries that North Korea may attack the South,” said Satoshi Okagawa, head of the foreign-exchange and money trading group in Singapore at Sumitomo Mitsui Banking Corp., a unit of Japan’s third-largest banking group. “There’s some safe-haven buying of the yen and the dollar.”

Australia Sales

The Australian dollar fell against 13 of its 16 most-traded peers after the Bureau of Statistics said retail sales declined 1.1 percent in October. That compared with the 0.4 percent gain estimated by economists in a Bloomberg survey.

There was “very weak consumer spending over the past few months in Australia, so that’s certainly weighing on the Aussie,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore.

The so-called Aussie declined to 81.40 yen from 81.53 yen yesterday. It was little changed at 96.83 cents, after slipping as much as 0.6 percent.

Taiwan’s dollar rose for the first time in three days as a report today showed overseas investors bought more of the island’s stocks than they sold this year. The local economy expanded 9.8 percent in the third quarter from a year earlier and will grow 9.98 percent this year and 4.51 percent in 2011, the government said Nov. 18.

“Growth in Taiwan and other Asian economies attracts overseas funds,” said Henry Lin, a Taipei-based foreign- exchange trader at Taiwan Shin Kong Commercial Bank. “The central bank will continue to act to reduce gains.”

Taiwan Dollar

The Taiwan dollar strengthened to NT$30.355 versus the greenback from NT$30.852 yesterday.

The euro pared losses on speculation European Central Bank policy makers will today announce steps to stem the region’s debt crisis. Economists surveyed by Bloomberg forecast the bank will keep its benchmark interest rate at 1 percent.

“The markets are expecting the ECB to do something,” said Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. in Wellington. “The euro seems to be supported, but it needs some concrete action coming from the ECB and other officials to say the right things.”

Speculation the debt crisis will spread to Portugal and Spain grew after European authorities approved an 85 billion- euro ($111.5 billion) aid package for Ireland on Nov. 28 when it became the second euro-area nation after Greece to seek financial help.

The European Financial Stability Facility may issue between 5 billion euros and 8 billion euros of bonds in January to fund aid to Ireland, Chief Executive Officer Klaus Regling said yesterday. The EFSF’s contribution to Ireland amounts to 17.7 billion euros, excluding bilateral loans from the U.K., Sweden and Denmark, according to a Nov. 28 statement issued in Brussels.

To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Ron Harui in Tokyo at rharui@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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