Dollar Rises After November Job Gains Top Forecast; Euro Falls

The dollar strengthened against the euro as U.S. employers added more jobs than forecast last month and the unemployment rate dropped to an almost four-year low.

The 17-nation currency fell against most major counterparts after a report that the majority of European Central Bank members indicated support for an interest-rate cut if the economy doesn’t pick up and Germany’s economic outlook was downgraded. Canada’s currency rallied to its strongest in a month as the nation’s employers added almost six times as many jobs as forecast.

“The market was thinking that the hurricane would have a much bigger impact on the U.S. numbers than it did, which was a big surprise,” said Fabian Eliasson, head of U.S. currency sales at Mizuho Financial Group Inc. in New York. “In the short-term, it means a more of a risk-on scenario. The whole fiscal cliff issue is so overbearing on us, nothing else trades like that right now.”

The dollar rose 0.3 percent to $1.2927 per euro at 5 p.m. in New York, reaching $1.2877 the highest since Nov. 23. It was 0.1 percent stronger at 82.49 per yen after gaining as much as 0.5 percent. The euro fell 0.2 percent to 106.67 yen.

Futures Positions

Futures traders cut bets that the euro will decline against the dollar to the least since September 2011, figures from the Commodity Futures Trading Commission show. Net shorts were 32,795 on Dec. 4, compared with net shorts of 66,693 a week earlier.

Net-bets on short yen positions against the dollar reached 90,326, the most since July 2007, the data show.

The dollar pared earlier losses against growth-related currencies such as Mexico’s peso and Canada’s dollar after U.S. consumer confidence fell to a one-year low as Americans grow concerned about the possibility of higher taxes due to the so-called fiscal cliff.

U.S. House Speaker John Boehner said “there’s no progress to report” on talks with President Barack Obama to avert tax increases and spending cuts set to take effect in January.

Mexico’s peso was the third-best performer against the dollar, after Canada and South Africa, as the unemployment rate fell to 7.7 percent in the U.S.

The peso rose 0.2 percent to 12.8505 per U.S. dollar. The currency has strengthened 8.4 percent this year through yesterday, the best performance among 16 major currencies tracked by Bloomberg.

Canada Levels

The Canadian dollar rose 0.3 percent to 98.84 cents per U.S. dollar after declining as much as 0.2 percent. It touched the strongest level since Nov. 7.

“If we can close lower on the day here and extend below 98.90, the downside opens up quite a bit more,” Shaun Osborne, chief currency strategist at Toronto-Dominion Bank, said in a telephone interview. “We’re still probably going to touch 97 or 98 over the course of the next few weeks.”

Canadian employment increased 59,300 and lowered the unemployment rate to 7.2 percent from 7.4 percent, the first decline in five months, Statistics Canada said today in Ottawa.

The Canadian currency was also buoyed as Canada’s government approved China’s Cnooc Ltd’s $15.1 billion takeover of Nexen Inc. and Petroliam Nasional Bhd.’s C$5.2 billion ($5.2 billion) takeover of Progress Energy Resources Corp.

The euro has lost 2.5 percent this year, the second-worst performer among the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen slid 9.5 percent and the dollar fell 2.2 percent.

Benchmark Rates

A majority of ECB policy makers were open to cutting the benchmark rate yesterday and there is a possibility of a reduction early next year, three officials with knowledge of the Governing Council’s deliberations said.

The central bank held its benchmark at a record low of 0.75 percent yesterday and kept the deposit rate at zero.

The Frankfurt-based Bundesbank cut its growth projection for 2013 to 0.4 percent from the 1.6 percent predicted in June and said the economy.

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, rose 0.2 percent to 80.412, touching the strongest since Nov. 23.

U.S. employment climbed by 146,000 following a revised 138,000 gain in October that was less than initially estimated, Labor Department figures showed today in Washington. The median estimate of 91 economists surveyed by Bloomberg called for a gain of 85,000. The jobless rate fell to 7.7 percent from 7.9 percent.

The Fed is working to boost the economy and reduce unemployment by continuing purchases of housing debt that have helped drive borrowing costs to an all-time low. The policy-setting Federal Open Market Committee’s last meeting of this year is scheduled for Dec. 11-12 in Washington.

“The Fed is still looking for a sustained improvement in the labor markets and it will take at least six months to see that,” said Vassili Serebriakov, a currency strategist at BNP Paribas SA in New York. “We still expect the dollar to weaken over time.”

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