Dollar Set for Weekly Advance Versus Yen Before Jobs Data; Aussie Slides

The dollar headed for its first weekly gain versus the yen in three weeks before data forecast to show U.S. employers added the most jobs since May, providing evidence the world’s largest economy is gaining momentum.

The greenback strengthened against most major counterparts before a report economists say will show U.S. factory orders increased for a third month. The yen rose for the first time in three days versus the euro on speculation that Japan’s exporters bought the currency after it touched a four-month low. The Australian dollar fell to the lowest in five weeks against the euro on prospects the European Central Bank will raise interest rates faster than the Reserve Bank of Australia.

“Nonfarm payrolls should be a cracker number,” said Matthew Brady, executive director for foreign exchange at JPMorgan Chase & Co. in Sydney. “You’ve got to start buying U.S. dollars across the board over the next three months, but probably not against the euro.”

The dollar traded at 82.37 yen as of 12:57 p.m. in Tokyo from 82.44 yen in New York yesterday when it touched 82.52 yen, the strongest since Feb. 24. The U.S. currency is poised for a 0.8 percent advance against the yen this week. The greenback was at $1.3955 per euro from $1.3969 yesterday.

The euro fell to 114.94 yen after earlier reaching 115.17 yen, the most since Nov. 4, from 115.16 yen yesterday. The so- called Aussie declined 0.1 percent to 72.59 euro cents, after dropping to 72.44 earlier, the weakest since Jan. 28.

U.S. Economic Reports

U.S. nonfarm payrolls increased by 196,000 in February, according to a Bloomberg News survey of economists before today’s Labor Department report. The jobless rate may rise to 9.1 percent from 9 percent in January, a separate survey showed.

“We’re forecasting nonfarm payrolls will rise by 200,000 and the jobless rate will be at 9 percent,” said Masafumi Yamamoto, chief currency strategist at Barclays Bank Plc in Tokyo. “Dollar-yen is likely to strengthen toward 83, also helped by the firm tone of euro-yen post-ECB.”

American factory orders climbed 2 percent in January, after a 0.2 percent increase in December, a separate Bloomberg survey showed before today’s report.

There’s a 39 percent chance the Fed will increase borrowing costs by December, futures contracts on the Chicago Board of Trade showed yesterday. The probability was 34 percent a day earlier. The benchmark rate has been at a range of zero to 0.25 percent since December 2008.

Japanese Exporters

The yen rose against most major peers on speculation that Japanese companies bought the currency to bring home overseas earnings before the nation’s fiscal year ends this month.

“Firms led by exporters are probably buying the yen,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “The yen’s level may be attractive to them.”

Japan’s large manufacturers expect the yen to average 86.47 per dollar in the year to March 31, according to the Bank of Japan’s latest Tankan business-confidence survey on Dec. 15. That’s the strongest level since the currency forecast was included in the report in 1996.

ECB President Jean-Claude Trichet said yesterday an “increase of interest rates in the next meeting is possible,” after the central bank kept its benchmark interest rate at 1 percent. Trichet and board member Lorenzo Bini Smaghi are among the ECB policy makers scheduled to speak in Paris and Cape Town today.

“It’s absolutely clear that the ECB will raise rates in April, with some now expecting 75 basis points worth of hikes this year,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate & Investment Bank in Tokyo. “The euro will likely strengthen further, initially targeting $1.4080,” the Nov. 8 high, he said.

Higher Euro Rates

Futures show traders added to bets on higher borrowing costs in the 17-nation euro bloc, with the implied yield on the three-month Euribor contract expiring in December rising 0.23 percentage point to 2.17 percent yesterday. The currency touched $1.3974 yesterday, the most since Nov. 9.

Swaps traders are betting the RBA will raise its benchmark by 36 basis points over the next 12 months, according to a Credit Suisse AG index. A basis point is 0.01 percentage point.

“Given the ECB is very hawkish, crosses like Aussie and euro are starting to come under pressure,” said Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp. “The RBA will be on hold for quite some time.”

Stronger Korean Won

South Korea’s won rose, headed for a weekly gain, as signs the global economic recovery is gaining momentum brightened the outlook for exports and bolstered demand for emerging-market assets.

The Asian nation’s exports rose 17.9 percent in February from a year earlier, the Ministry of Knowledge Economy said on March 1. Industrial production expanded 13.7 percent in January from the prior year, Statistics Korea said yesterday. The Kospi stock index climbed 1.1 percent after the Standard & Poor’s 500 Index gained 1.7 percent yesterday.

“Equities in the U.S. are helping Asian currencies strengthen and the Middle East crisis seems to be taking a back seat,” said Robert Reilly, co-head of Asian fixed income at Societe Generale SA in Hong Kong.

The won rose 0.3 percent to 1,116.35 per dollar after touching 1,115.75, the strongest level since Feb. 21. It was set for a 0.8 percent gain this week.

To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

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

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