The greenback traded little changed at $1.3967 per euro at 9:14 a.m. in New York, from $1.3969 yesterday, after falling as much as 0.2 percent. It touched $1.40 per euro for the first time since Nov. 8. The shared currency appreciated 0.2 percent to 115.43 yen, and the dollar rose 0.2 percent to 82.63 yen.
“We were expecting this to be a fairly strong number because we felt that there weren’t any influences from weather,” said Andrew Busch, a global currency strategist at Bank of Montreal in Chicago. “We got better-than-expected data, but it’s mixed.”
The yen depreciated for the fifth straight day versus the dollar as Labor Department data showed payrolls increased amid an improving economy and more seasonable weather. The median forecast in a Bloomberg News survey was for a gain of 196,000. Private hiring, which excludes government agencies, rose by 222,000 in February, exceeding the 200,000 median forecast in a Bloomberg survey.
“The day may be dollar-positive because we’ve had a lot of dollar weakness recently, so this may be a little bit of a relief rally since the euro went from $1.34 to $1.40 in two weeks without a pause,” said Carl Forcheski, a director on the corporate currency sales desk at Societe Generale SA in New York.
IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major trade partners, was little changed at 76.485 after falling for the past two days.
Past Reports
The index increased 0.4 percent Feb. 4 after the U.S. reported January payrolls rose by 36,000, less than the 146,000 forecast by economists. It rose 0.3 percent Jan. 7, when a report showed payrolls increased less than expected in December and the unemployment rate dropped.
The dollar fell earlier today against the euro as stock markets rose before the payrolls report.
The euro headed for a third straight weekly increase against the greenback, the longest run of gains since October, after European Central Bank President Jean-Claude Trichet said yesterday the ECB may increase interest rates at its next meeting. Sterling declined against the dollar after house prices fell in February, fueling concern that the economic recovery won’t be sustained.
ECB Rates
The greenback tumbled yesterday versus the euro after Trichet’s statement. The ECB has kept its key rate at 1 percent since May 2009 to support the economy.The Federal Reserve has kept the U.S. benchmark at zero to 0.25 percent since December 2008, and Chairman Ben S. Bernanke said in congressional testimony this week the American economy still needs the support of a low rate.
“Interest-rate spreads are very, very important in currency valuations,” John Taylor, chairman of New York-based FX Concepts LLC, the world’s biggest currency hedge fund, said yesterday in a Bloomberg Television interview on “In the Loop” with Betty Liu. “Dollar interest rates are not going anywhere.”
The dollar dropped over the first four days of the week versus 12 of its 16 most-traded counterparts even as reports showed an improving U.S. economy. The Fed said in a business survey the labor market improved throughout the country early this year, and manufacturing and service industries both expanded more than forecast in February.
Service Businesses
The Institute for Supply Management’s index of non- manufacturing businesses increased to 59.7, the highest level since August 2005, from 59.4 in January, the Tempe, Arizona- based group said yesterday. Economists in a Bloomberg survey forecast the gauge would fall to 59.3.The ISM’s factory index increased to 61.4 from 60.8 in January, the fastest pace since May 2004, data showed on March 1. Readings greater than 50 signal growth.
Overall, the U.S. economy “continued to expand at a modest to moderate pace,” the central bank said March 2 in its Beige Book survey.
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