Reuters: US Dollar Report: FOREX-Dollar hits two-week high vs yen on jobs; euro rallies

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FOREX-Dollar hits two-week high vs yen on jobs; euro rallies Oct 5th 2012, 16:37 Fri Oct 5, 2012 12:37pm EDT * U.S. unemployment rate drops to 4-year low * Jobs report won't keep Fed from doing QE * Bank of Japan keeps monetary policy steady By Gertrude Chavez-Dreyfuss NEW YORK, Oct 5 (Reuters) - The dollar climbed to two-week highs against the yen on Friday after U.S. data showed the unemployment rate dropped to a near four-year low in September. The euro also soared to a two-week high versus the greenback and yen after the U.S. jobs data increased investors' confidence about the U.S. economy and prompted them to buy currencies that offer higher returns than the dollar and the yen. The New Zealand dollar, as well as the Norwegian and Swedish kronas, also gained against the greenback and the yen as a result of this improvement in risk sentiment. While the number of new jobs created last month was broadly in line with expectations, the unemployment rate was lower than expected, and payroll figures for July and August were revised higher by 86,000 jobs. "The details were about as good as they realistically could be under the circumstances," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. The euro rose as high as $1.3071, the highest since Sept. 19. It was last at $1.3047, up 0.2 percent. Against the yen, the euro advanced to a two-week peak of 102.80, and by midday, it was up 0.5 percent at 102.63 yen. Some analysts said the U.S. jobs data was not strong enough for the Federal Reserve to consider ending monetary easing. Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, for instance, described the U.S. employment report as "decidedly mixed." He cited the household survey, which showed 873,000 new jobs created - "the most in a couple of decades" - but two-thirds of those positions were part-time jobs. He also pointed to data in the report showing factories lost 16,000 jobs in September. Over the past three months, factories have lost about 21,000 net jobs. "The favorable trend for manufacturing employment has clearly leveled off," Chandler said. The employment report temporarily took investors' minds away from the euro zone's debt crisis. While the euro posted gains on the U.S. jobs data, investors were wary of pushing it higher. WAITING FOR SPAIN , WATCHING THE BOJ Market participants are still awaiting Spain's request for aid, a move that would prompt the European Central Bank to buy its bonds and lower the country's borrowing costs. That would be be viewed as positive for the euro. ECB President Mario Draghi said on Thursday that everything was in place for the central bank to buy the bonds of struggling euro-zone countries like Spain and conditions linked to it need not be punitive. Spanish 10-year debt yields have declined - a positive sign - and the euro has rallied since the ECB announced its plan to buy bonds of debt-stricken countries, in anticipation of Spain eventually seeking financial assistance. But that positive momentum may not last. "The longer Spain prevaricates on the aid front, the more likely it is that the market will price out this bailout premium," said Richard McGuire, senior fixed-income strategist at Rabobank, in London. Investors are also wary of buying the yen on concerns that the Japanese authorities could intervene to weaken it. Japanese officials have expressed concerns about the strength of the yen in recent weeks. The yen earlier nudged higher after the Bank of Japan kept monetary policy unchanged and held off from additional easing measures. The reaction was limited, however, as Friday's decision was in line with expectations. Traders said the dollar would probably find support from buyers at 78.00 yen, while resistance came in at the 100-day moving average around 78.83 yen. Link this Share this Digg this Email Reprints

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