Dollar rises to two-month high as employment gains top forecasts

The dollar climbed to a two-month high after a Labor Department report showed the economy added more jobs than forecast last month, boosting bets the Federal Reserve will reduce stimulus.

The greenback gained against all of its 16 most-traded peers except Mexico’s peso as payrolls grew by 204,000 in October, versus the median forecast in a Bloomberg News survey for a 120,000 advance. The euro extended its biggest two-week decline in more than a year versus the dollar as Standard & Poor’s lowered France’s credit rating after an interest-rate cut in the region yesterday. The peso erased losses after policy makers signaled the end of rate reductions.

“It’s certainly a dollar-positive headline,” Douglas Borthwick, the head of foreign exchange at Chapdelaine & Co. in New York, said in a phone interview. “But, one, the Fed wants to seek growth in all the employment sectors and, two, one economic number doesn’t make a trend. And the market knows that very well.”

The Bloomberg U.S. Dollar Index rose 0.5% to 1,021.72 at 3:20 p.m. in New York. It touched 1,024.31, the highest since Sept. 13, as it breached 200-day and 100-day moving averages.

The dollar rose 0.4% to $1.3363 per euro after appreciating to $1.3296 yesterday, the strongest level since Sept. 16. The euro added 0.6% to 132.43 yen. The greenback rose 1% to 99.10 yen.

The common currency has dropped 3.2% over the past two weeks, the biggest such slide since July 2012.

Peso, Krona

Mexico’s currency advanced as the minutes of last month’s central-bank meeting showed policy makers, who reduced the key interest rate to a record low 3.5%, said borrowing costs below this level wouldn’t be advisable.

The peso gained 0.2% to 13.1946 per U.S. dollar after falling as much as 0.6%.

Sweden’s krona dropped against most of its major peers after a report showed industrial production was unchanged in September from a month earlier. Economists surveyed by Bloomberg had forecast a 1.3% increase.

The krona weakened for a second day versus the dollar, slipping 1% to 6.5978. It fell for the first time in five days against the euro, depreciating 0.6%, to 8.8152 after touching 8.8516, the weakest level since June 25.

The real fell dropped the most this week among Latin American currencies on concern Brazil isn’t doing enough to curb its budget deficit and as speculation mounted that Fed will begin curtailing stimulus.

The currency slipped 0.3% today to 2.3133, sliding to the weakest level since Sept. 5 and extending its weekly decline to 2.6%.

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