The dollar strengthened against the euro as U.S. employers added more jobs than forecast last month and the unemployment rate dropped to an almost four-year low.
The 17-nation euro fell to a two-week low versus the greenback after a report that the majority of European Central Bank members indicated support for an interest-rate cut if the economy doesn’t pick up and Germany’s economic outlook was downgraded. Canada’s currency rallied to its strongest in a month versus the dollar as the nation’s employers added almost six times as many jobs as forecast in November. The Federal Reserve is weighing whether to expand the third round of asset purchases known as quantitative easing, or QE3, this month.
“The euro is not our preferred currency and we like to buy dips in the Australian, New Zealand and Canadian dollar,” said Vassili Serebriakov, a currency strategist at BNP Paribas SA in New York. “We still expect the dollar to weaken over time. The Fed is still looking for a sustained improvement in the labor markets and it will take at least six months to see that.”
The dollar rose 0.4 percent to $1.2914 per euro at 10:36 a.m. in New York, reaching $1.2877 the highest since Nov. 23. It was little changed at 82.45 per yen after gaining as much as 0.5 percent. The euro fell 0.3 percent to 106.48 yen.
Mexico’s peso was the second-best performer against the dollar, after Canada, as the unemployment rate fell to 7.7 percent in the U.S., both nations’ largest trading partner.
The gains in the peso were limited after the nation’s inflation rate fell for a second month, bolstering projections the central bank won’t raise interest rates.
The peso rose 0.2 percent to 12.8477 per U.S. dollar. The currency has strengthened 8.3 percent this year through yesterday, the best performance among 16 major currencies tracked by Bloomberg.
The Canadian dollar rose 0.3 percent to 98.82 cents per U.S. dollar after declining as much as 0.2 percent. It touched the strongest level since Nov. 7.
“If we can close lower on the day here and extend below 98.90, the downside opens up quite a bit more,” Shaun Osborne, chief currency strategist at Toronto-Dominion Bank, said in a telephone interview. “We’re still probably going to touch 97 or 98 over the course of the next few weeks.”
Canadian employment increased 59,300 and lowered the unemployment rate to 7.2 percent from 7.4 percent, the first decline in five months, Statistics Canada said today in Ottawa.
The euro has lost 2.6 percent this year, the second-worst performer among the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen slid 9.7 percent and the dollar fell 2.1 percent.
A majority of ECB policy makers were open to cutting the benchmark rate yesterday and there is a possibility of a reduction early next year, three officials with knowledge of the Governing Council’s deliberations said.
The central bank held its benchmark at a record low of 0.75 percent yesterday and kept the deposit rate at zero.
The Frankfurt-based Bundesbank cut its growth projection for 2013 to 0.4 percent from the 1.6 percent predicted in June and said the economy.
Sweden’s krona fell against all its major counterparts, weakening 0.1 percent against the euro to 8.6111, and falling 0.5 percent versus the dollar to 6.6678.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, rose 0.3 percent to 80.525, touching the strongest since Nov. 23.
U.S. employment climbed by 146,000 following a revised 138,000 gain in October that was less than initially estimated, Labor Department figures showed today in Washington. The median estimate of 91 economists surveyed by Bloomberg called for a gain of 85,000. The jobless rate fell to 7.7 percent from 7.9 percent.
The Fed is working to boost the economy and reduce unemployment by continuing purchases of housing debt that have helped drive borrowing costs to an all-time low. The policy- setting Federal Open Market Committee’s last meeting of this year is scheduled for Dec. 11-12 in Washington.
The yen strengthened earlier against the dollar after a magnitude 7.3 earthquake struck Japan, mirroring movements in the currency after a record temblor in March 2011. The Japanese currency gained as much as 0.3 percent to 82.18.
In 2011 the yen surged to a record level in the days following the quake and the tsunami that led to meltdowns at a nuclear plant in Fukushima. A tsunami alert was issued for northeast Japan after the quake shook buildings in Tokyo today.