Euro weakens from almost two-month high amid ECB speculation

Jobs Data

The U.S. economy added 125,000 payroll jobs in August, according to the median estimate in a Bloomberg News survey of 83 economists before the Labor Department report Sept. 7. That compared with an increase of 163,000 jobs in July.

The Standard & Poor’s 500 Index dropped as much as 0.7 percent, while the MSCI World Index of stocks fell 0.4 percent.

Australia’s dollar declined 0.2 percent against its U.S. counterpart after gaining as much as 0.4 percent. The central bank kept its overnight cash-rate target at 3.5 percent. It earlier fell to $1.0224, the weakest level since July 25. The Aussie was little changed at 80.17 yen after sliding 0.9 percent yesterday.

The nation’s economy expanded 0.7 percent in the second quarter from the previous three months for the strongest first half of growth since 2007, a Bloomberg News survey showed before a government report tomorrow.

New Zealand’s dollar tumbled against the greenback even as the nation posted its first gain in commodity export prices since January. The so-called kiwi fell 0.5 percent to 79.36 U.S. cents and declined 0.3 percent to 62.23 yen.

ECB Plan

Draghi said yesterday the bank’s primary mandate compels it to intervene in bond markets to wrest back control of interest rates and ensure the euro’s survival. The ECB announces its next policy decision on Sept. 6.

Mounting his strongest case yet for ECB bond purchases, Draghi told lawmakers in a closed-door session at the European Parliament in Brussels that the bank has lost control of borrowing costs in the 17-nation monetary union. Bloomberg News obtained a recording of his comments, some of which were published by Italian news agency AGI yesterday.

There are growing “expectations for some kind of ECB bond- buying intervention,” said Eimear Daly, a currency analyst at Monex Europe in London. “Everyone is completely fixated on the bond-buying plan.”

European Union President Herman Van Rompuy traveled to Berlin for talks with German Chancellor Angela Merkel today as Italian Prime Minister Mario Monti hosts French President Francois Hollande in Rome.

Traders and strategists are more divided than at any time since 2011 over whether officials will be able to keep the currency from tumbling, according to data compiled by Bloomberg.

At about $1.26, the euro is 3.3 percent above the $1.22 median year-end estimate of more than 50 analysts, after the gap expanded to 3.8 percent last week. The last time the euro exceeded the consensus by that much was in July 2011, and it tumbled 9.4 percent in the next 10 weeks.

Bloomberg News

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