Dollar Nears One-Week Low as U.S. Job Losses Expected to Slow

Nov. 6 (Bloomberg) -- The dollar traded near a one-week low against the euro before a government report today forecast to show U.S. employers cut fewer jobs last month, boosting demand for higher-yielding assets.

Japan’s currency headed for a weekly loss against the euro before a report today that economists said will show German factory orders increased in September for a seventh month. The pound headed for a second weekly advance against the dollar on speculation a U.K. report will show producer prices rose for a fourth month in October, backing the case for the Bank of England to refrain from lowering interest rates.

“Positive economic data will likely encourage investors to buy higher-yielding assets at the expense of the dollar,” said Toshiya Yamauchi, a Tokyo-based manager in the foreign-exchange margin trading department at Ueda Harlow Ltd. “The pace of non- farm job losses seems to be slowing. The yen tends to be sold along with the dollar when the economic outlook improves.”

The dollar traded at $1.4868 per euro at 9:09 a.m. in Tokyo from $1.4871 in New York yesterday, when it touched $1.4917, the weakest level since Oct. 27. The dollar has dropped 1 percent this week against the euro.

Japan’s currency was at 134.99 yen per euro from 134.92, heading for a 1.7 percent loss this week. The dollar fetched 90.79 yen from 90.71 yen. On the week, the greenback has gained 0.7 percent. The pound traded at $1.6563 from $1.6583 in New York yesterday, when it climbed to $1.6636, the highest level since Oct. 23. It’s gained 0.7 percent on the week.

‘Last to Exit’

The Labor Department is forecast to report U.S. employers eliminated 175,000 jobs in October after a reduction of 263,000 in the previous month, according to the median estimate of economists in a Bloomberg News survey. The data are due today in Washington. The U.S. unemployment rate probably rose to 9.9 percent last month from 9.8 percent in September, according to a separate Bloomberg News survey.

“The Federal Reserve won’t be able to implement exit strategies until the jobless rate improves,” said Yoshihiro Nomura, Tokyo-based foreign exchange team manager at Trust & Custody Services Bank Ltd. “They may start raising interest rates near the end of next year. The Fed will be among the last to exit, and dollar weakening will continue for a while.”

The Federal Reserve on Nov. 4 repeated its intent to keep rates “exceptionally low” for “an extended period” as long as the inflation outlook is stable and unemployment fails to decline. Policy makers held the target rate for overnight lending between banks in a range of zero to 0.25 percent.

Bank of England

Germany’s Economy Ministry is forecast to report factory orders rose 1 percent in September after gaining 1.4 percent in August, according to the median estimate of economists in a Bloomberg News survey. The data are due today in Berlin.

The pound headed for a weekly gain against the yen after the Bank of England yesterday left its key rate at 0.5 percent and raised the amount of bonds it will buy to 200 billion pounds ($332 billion). It was less than the median forecast of 225 billion pounds in a Bloomberg News survey of economists.

There are “a number of indicators of spending and confidence” that “suggest that a pickup in economic activity may soon be evident,” the BOE’s Monetary Policy Committee said in a statement. “The committee believes that the prospect is for a slow recovery in the level of economic activity.”

The price of goods at U.K. factory gates rose 0.2 percent in October after a 0.5 percent increase in September, a separate Bloomberg survey showed before the Office for National Statistics releases the data at in London today.

“The BOE is sounding a little more upbeat on economic prospects and has increased its quantitative easing program by less than expected,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “As a result, the pound is finding strength.”

The pound traded at 150.30 yen from 150.42 yen in New York yesterday. It’s gained 1.4 percent on the week.