Dollar Trades Near 2009 Low Before U.S. Company Jobs Report

Aug. 5 (Bloomberg) -- The dollar traded near its lowest level against the euro this year before a private report that economists said will show U.S. companies eliminated fewer jobs in July, reducing demand for safer assets.

The euro approached a seven-week high versus the yen on speculation a European report will show retail sales rose in June, adding to signs the recession in the 16-nation region may be abating. The pound traded near its strongest in nine months versus the dollar on prospects U.K. data may show the pace of contraction in manufacturing slowed in June.

“It’s more likely that we will continue to see better economic figures than worse ones,” said Masafumi Yamamoto, head of foreign exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo. “That should support risk appetite,” drawing money away from the dollar and the yen.

The dollar traded at $1.4415 per euro at 9:16 a.m. in Tokyo, from $1.4408 in New York yesterday. It declined to $1.4445 on Aug. 3, the weakest since Dec. 18. The yen fetched 137.37 per euro from 137.21, after falling to 137.60 yesterday, the lowest since June 15. Japan’s currency was at 95.29 per dollar from 95.23. The pound traded at $1.6946 from $1.6939. It touched $1.7004 yesterday, the highest since Oct. 21.

U.S. companies cut an estimated 350,000 workers from payrolls in July after a reduction of 473,000 in June, according to a Bloomberg News survey of economists. The report from ADP Employer Services is due later today.

The National Association of Realtors yesterday said pending home resales increased 3.6 percent in June after a revised 0.8 percent gain in May. The median forecast of 35 economists surveyed by Bloomberg News was for a 0.7 percent advance.

‘Risk Appetite’

“If this week’s events don’t dent expectations for a global economic recovery and risk appetite is sustained then the U.S. dollar will likely remain under pressure,” John Kyriakopoulos, Sydney-based head of currency strategy at National Australia Bank Ltd., wrote in a research report.

The euro extended last week’s advance against the yen as retail sales in the 16-nation euro area rose 0.3 percent in June following a 0.4 percent decline in May, a separate Bloomberg survey showed. The European Union’s statistics office in Luxembourg will release the data today.

“The report may indicate that Europe’s economic situation is improving,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “The euro is headed higher.”

The European Central Bank cut the main refinancing rate to 1 percent and began buying as much as 60 billion euros ($86.5 billion) of covered bonds to stimulate lending and boost the economy. The ECB will keep the rate unchanged when it meets tomorrow, according to all 52 economists surveyed by Bloomberg.

British Pound

The pound may gain for a fifth day against the dollar as the U.K.’s Office of National Statistics is likely to say today manufacturing output fell 0.1 percent from May, after a 0.5 percent contraction in April, another Bloomberg survey showed.

The Nationwide Building Society said today its index of U.K. consumer confidence rose to 60 in July, the highest since May 2008 and up from 59 in June. The figures add to evidence that Britain has passed the worst of the recession.

Bank of England policy makers will tomorrow decide whether the recovery is strong enough after five quarters of contraction for the central bank to ease off on its program of buying bonds with newly created money.

The U.K. currency has strengthened 16 percent against the greenback this year and gained 22 percent versus the yen, according to data compiled by Bloomberg.