The dollar fell to a one-week low against the euro after a
government report showed the U.S. unemployment rate increased the most
in more than two decades, adding to evidence the economy may not be
rebounding.
The decline pushed the currency to its biggest two-day drop since March
on speculation the Federal Reserve may refrain from raising borrowing
costs this year. The dollar fell yesterday as European Central Bank
President Jean-Claude Trichet said a July increase in the main
refinancing rate, now twice the U.S. benchmark, is ``possible.'' Crude
oil surged for a second day. The U.S. currency has fallen 0.9 percent
against the euro this week, while gaining 0.1 percent versus the yen.
The euro was headed for a weekly increase of 1.1 percent versus the
yen.The yuan rose the most in more than three months against the dollar
today on speculation China will seek a stronger currency and a narrower
trade surplus to help curb inflation. The currency increased 0.3
percent to 6.9231 against the dollar in Shanghai and has risen the same
amount for the week.
The dollar extended its decline against the euro after the Radiocor
news agency reported that ECB executive board member Lorenzo Bini
Smaghi said there's ``broad consensus'' that an interest rate increase
may be necessary next month.
U.S. payrolls have shrunk every month this year, dropping 49,000 in
May, the Labor Department said today in Washington. The jobless rate
increased to 5.5 percent from 5 percent, the biggest jump since
February 1986. That compares with an advance to 5.1 percent forecast by
economists.
The pound was headed for a 0.7 percent weekly decline against the
dollar and a 1.8 percent drop versus euro after the Bank of England
kept its key interest rate at 5 percent yesterday.