Dollar Rises to Two-Month High Against Yen

The dollar rose to a two-month high against the yen as gains in U.S. company hiring and factory orders supported the case for the Federal Reserve to raise interest rates.

The U.S. currency gained against 12 of its 16 major peers before a report on April 4 is forecast to show American employers boosted nonfarm hiring last month. The euro fluctuated against the yen before the European Central Bank reviews monetary policy tomorrow. New Zealand’s dollar weakened against all of its major counterparts after a gauge of dairy products indicated a decline in prices. Norway’s krone rose after unemployment fell.

“Dollar-yen remains well supported,” said Robert Lynch, a currency strategist at HSBC Holdings Plc in New York. The company-hiring data “showed a respectable and near-expected gain, but that probably won’t boost expectations for Friday’s full nonfarm payrolls number.”

The dollar climbed 0.2 percent to 103.88 yen at 5 p.m. in New York after advancing to 103.94, the highest since Jan. 23. The U.S. currency added 0.2 percent to $1.3767 per euro. The yen was little changed at 143.01 per euro.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major counterparts, rose 0.2 percent to 1,017.78.

Kiwi, Krone

New Zealand’s dollar fell for a second day after the weighted average price of nine products traded at the GlobalDairyTrade, a worldwide benchmark, slid 8.9 percent from two weeks ago to $4,124 a ton yesterday. The nation is home to the world’s biggest dairy exporter.

The kiwi declined 0.8 percent to 85.73 U.S. cents after sliding 0.3 percent yesterday.

Norway’s krone rose against the euro after a report showed unemployment slid to 3.5 percent in January, from 3.7 percent in December. New Deputy Governor Jon Nicolaisen backed the central bank’s policy on the currency yesterday, saying “if it ain’t broke, don’t fix it.”

The currency gained 0.4 percent to 8.2189 per euro and 0.2 percent to 5.9705 per dollar.

China’s yuan touched a one-week high as the People’s Bank of China raised the reference rate for a second day, boosting it 0.02 percent to 6.1493 per dollar. The official Purchasing Managers’ Index was at 50.3 in March, data showed yesterday, compared with 50.2 in February and the 50.1 median estimate in a Bloomberg survey of analysts.

The yuan rose 0.02 percent to close at 6.2056 per dollar, taking its gain in the past two days to 0.2 percent, according to China Foreign Exchange Trading System prices.

‘Firmer Dollar’

U.S. companies increased payrolls by 191,000 last month, up from a revised 178,000, figures from the ADP Research Institute in Roseland, New Jersey, showed. The median forecast of 38 economists surveyed by Bloomberg called for a 195,000 advance. Estimates ranged from gains of 150,000 to 275,000.

The Commerce Department said factory orders rose 1.6 percent in February from a revised 0.5 percent gain in January, versus a forecast of a 1.2 percent rise in a Bloomberg survey.

“We could over the next few months gradually move to a firmer dollar,” said Jane Foley, a senior currency strategist at Rabobank International in London. “We need to see several sets of stronger-than-expected or just decent data in order to show us the U.S. has this cyclical advantage.”

Economists predict the Labor Department will say on Friday employers added 200,000 jobs last month, versus 175,000 in February.

Rate Outlook

The Fed has been trimming its monthly bond purchases, to $55 billion from $85 billion last year, and central-bank Chair Janet Yellen said last month borrowing costs could rise in “around six months” after it stops buying debt.

“There’s certainly nothing that came out from ADP that’s inconsistent with expectation of a good jobs report on Friday,” Robert Sinche, global strategist at Stamford, Connecticut-based Pierpont Securities LLC, said of the payrolls report in a telephone interview. “The most interesting thing that’s going on is dollar-yen’s going to creep higher -- 105 is a huge psychological level.”

ECB policy makers will keep their main refinancing rate at a record 0.25 percent tomorrow, according to all except three of 57 economists surveyed by Bloomberg News. One sees a cut tomorrow to 0.1 percent, while two call for 0.15 percent.

The euro has weakened 0.8 percent versus the dollar since ECB President Mario Draghi said on March 13 the exchange rate is “increasingly relevant in our assessment of price stability.”

The dollar dropped 1.3 percent in the past three months, the worst performer after Canada’s 5.2 percent plunge among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro climbed 0.2 percent and the yen slid 0.2 percent.

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