The dollar fell to a two-month low against the euro as a report showed
U.S. companies shed more jobs last month than economists forecast,
reducing bets that the Federal Reserve will increase borrowing costs
next month.
The U.S. currency also weakened as
economists predicted that the European Central Bank will raise its main
refinancing rate by a quarter-percentage point tomorrow while the U.S.
Labor Department will say employers eliminated jobs in June for a sixth
straight month.
``The pace of job losses has speeded
up,'' said David Powell, currency strategist in New York at Bank of
America Corp. ``It points to the downside risk of tomorrow's number.
The dollar is likely to hit $1.60 once again over the coming days, if
not tomorrow.''
Futures on the Chicago Board of Trade
show a 20 percent chance the Fed will raise its 2 percent target rate
for overnight lending between banks by a quarter-percentage point at
its meeting on Aug. 5, compared with 25 percent odds yesterday.
The
European currency rose earlier after a newspaper reported that ECB
President Jean-Claude Trichet said there's a risk of inflation
``exploding'' if central banks aren't decisive and the European Union
said producer prices rose by a record 7.1 percent in May.
The
Labor Department will report tomorrow that U.S. employers eliminated
60,000 jobs including government positions last month, according to the
median forecast of 79 economists. The dollar weakened 1.2 percent
against the euro and 1 percent versus the yen on June 6, when the
government reported that the U.S. lost 49,000 jobs in May.