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Dollar Trades Near Four-Day High Versus Euro Before Jobs Report

Ben S. Bernanke, chairman of the U.S. Federal Reserve
Federal Reserve Chairman Ben S. Bernanke “boils it all down to employment, so a strong employment report would be quite important for the dollar.” Photographer: Andrew Harrer/Bloomberg

Feb. 4 (Bloomberg) -- The dollar was near its highest level in four days versus the euro before a U.S. government report that economists said will show employers added the most jobs in three months in January.

Canada’s dollar rose against all of its major counterparts after a report showed employers added four times the jobs forecast. The greenback posted its biggest advance in 10 weeks against the common currency yesterday as traders pared bets on European Central Bank interest-rate increases this year. European Union leaders meet today to attempt to resolve their differences on a solution to the region’s sovereign-debt crisis.

“Markets are hoping that we will get a reasonably positive payrolls number,” said Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “There’s a degree of positivity already priced in. We would need to see a big figure with significant back revisions” for the dollar to extend yesterday’s gains, he said.

The U.S. currency was little changed at $1.3633 per euro at 7:41 a.m. in New York, compared with $1.3634 yesterday, when it rallied 1.3 percent, the most since Nov. 23. The greenback was headed for a 0.2 percent weekly decline against its European peer. The dollar traded at 81.65 yen, compared with 81.63. The euro was at 111.28 yen, compared with 111.29, after sliding 1.2 percent versus the Japanese currency yesterday.

Canada’s dollar rose versus the greenback as Statistics Canada reported that Employment rose by 69,200 last month after an increase of 22,000 in December. The median forecast of 26 economists in a Bloomberg News survey was for 15,000 new jobs. The jobless rate rose to 7.8 percent.

Canada’s Dollar

Canada’s currency appreciated 0.5 percent to 98.61 cents per U.S. dollar, from 99.11 yesterday. The loonie advanced 0.6 percent to 82.82 yen.

U.S. nonfarm payrolls likely increased by 146,000 in January after climbing by 103,000 in the previous month, according to a Bloomberg News survey of 85 analysts before today’s Labor Department report. The jobless rate probably rose to 9.5 percent from 9.4 percent, a separate survey showed.

The Institute for Supply Management’s index of U.S. non-manufacturing businesses released yesterday showed service industries expanded in January at the fastest pace since August 2005, indicating the economic recovery is broadening.

Federal Reserve Chairman Ben S. Bernanke said yesterday in a Washington speech that the U.S. needs to see faster job growth for a sufficient time before policy makers can be assured the recovery has taken hold.

Bernanke on Economy

“With output growth likely to be moderate for a while and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level,” Bernanke said.

The Fed chairman gave no indication whether he’ll maintain or adjust monetary stimulus after the U.S. central bank finishes in June a program of asset buying, known as quantitative easing, aimed at boosting the economy.

The euro headed for a second weekly decline versus the yen before EU leaders meet in Brussels to try to narrow differences on a strategy to end the region’s financial crisis. Germany and France, the euro region’s two leading economic powers, are at odds over possible bond buybacks and a “competitiveness pact” that is German Chancellor Angela Merkel’s condition for strengthening the safety net for debt-strapped countries.

“Until those steps are officially announced, the market remains in a state of limbo,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “I still think the sovereign-debt problem remains elevated in the euro zone, which remains a weight on the euro. The stage could now be set for a modest dollar rebound.”

ECB Inflation View

Inflation has been prompted “mainly” by rising energy and commodity costs, ECB President Jean-Claude Trichet said yesterday, dimming the prospect of an increase in rates. Those factors have “not so far affected our assessment that price developments will remain in line with price stability over the policy-relevant horizon,” he said.

The pound headed for weekly gains against the euro and the dollar as a report showed house prices rose in January, adding to signs the Bank of England may have room to raise interest rates this year. Home values rose 0.8 percent to 164,173 pounds ($265,336) from the previous month, Lloyds Banking Group Plc’s mortgage unit said in a statement today.

“All the data this week has been pretty strong,” said Paul Bednarczyk, a strategist in London at 4Cast Ltd., a research company that counts central banks among its subscribers. “There’s a lot more talk of an interest rate hike,” as early as May.

Pound’s Weekly Gain

Sterling slipped 0.2 percent to $1.6105 against the dollar today, trimming its weekly advance to 1.5 percent. The pound was at 84.67 pence per euro, heading for a 1.4 percent gain over the past five days.

The Aussie gained versus the dollar after the Reserve Bank boosted its annual growth forecast for 2011 to 4.25 percent from a November prediction of 3.75 percent. Consumer prices will increase 3 percent this year, from a previous estimate of 2.75 percent, policy makers said.

Australia’s currency climbed to $1.0195, the strongest level since Jan. 3, before trading at $1.0173, compared with $1.0153 yesterday. The currency has advanced 2.4 percent against the greenback this week.

To contact the reporters on this story: Emma Charlton in London at; Candice Zachariahs in Sydney at

To contact the editor responsible for this story: Daniel Tilles at

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