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Dollar Fluctuates Versus Euro as Jobs Data Trail Forecast

The dollar gained versus most major counterparts after a report showed U.S. employment rose less than forecast in April, boosting demand for the safety of the greenback.

Europe’s shared currency headed for its first weekly loss in three weeks against the dollar after a report showed the region’s manufacturing and services industries shrank in April more than forecast, and France and Greece prepared to hold elections this weekend. The U.S. currency strengthened even amid speculation the Federal Reserve may keep accommodative monetary policy in place longer to support the economy.

“The tone of the payrolls report was negative,” said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co. in New York. “People are already looking past the jobs report ahead to the elections that are taking place in Europe this weekend. That’s going to make some of the market responses muted.”

The dollar gained less than 0.1 percent to $1.3145 per euro at 9:09 a.m. New York time, poised for a weekly advance of 0.8 percent. The greenback declined 0.2 percent to 79.99 yen. The 17-nation currency fell 0.2 percent to 105.23 yen.

Nonfarm payrolls climbed 115,000, the smallest gain in six months, after a revised 154,000 rise in March that was more than initially estimated, Labor Department figures showed today in Washington. The median estimate of 85 economists surveyed by Bloomberg News called for a 160,000 advance. The jobless rate fell to a three-year low of 8.1 percent.

‘Weaker Report Overall’

“It’s a weaker report overall,” said David Mann, regional head of research for the Americas at Standard Chartered Plc in New York. “It’s not weak enough to make the market convinced that quantitative easing is coming soon. There’s not yet enough confidence of that, but it’s starting to raise a few more concerns.”

The Dollar Index (DXY), which Intercontinental Exchange Inc. uses to measure the greenback against the currencies of six major U.S. trade partners, was little changed at 79.237.

The gauge fell 0.2 percent on April 6, when the Labor Department reported payrolls added 120,000 jobs, which trailed even the lowest estimate in a Bloomberg News survey that projected an increase 205,000.

The jobs data came a day after the Institute for Supply Management’s gauge of U.S. service industries, which account for almost 90 percent of the U.S. economy, trailed forecasts in April. The Tempe, Arizona-based group’s nonmanufacturing index fell to a four-month low of 53.5, from 56 in March. Readings greater than 50 signal growth.

‘Do More’

Fed Chairman Ben S. Bernanke said last week the central bank is “prepared to do more” if necessary to boost the economy. He spoke at a press conference after his Federal Open Market Committee refrained at a two-day meeting from new stimulus moves and said in a statement the economy has been expanding moderately.

The central bank bought $2.3 trillion of bonds in two rounds of quantitative easing from December 2008 to June 2011 to lower borrowing costs. The Dollar Index fell 14 percent during that period.

Other U.S. economic data have signaled growth. Manufacturing expanded in April at the fastest pace in almost a year, according to the ISM’s factory index. It reached a reading of 54.8, the group said May 1.

To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net

To contact the editor responsible for this story: Robert Burgess at bburgess@bloomberg.net

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