The dollar traded near a two-month low against the euro on speculation
U.S. payrolls dropped for a sixth month and the European Central Bank
will signal more than one rate increase is needed to curb inflation.
All but one of 58 economists surveyed by Bloomberg News said ECB policy
makers, led by Jean-Claude Trichet, will raise the refinancing rate a
quarter-point to 4.25 percent today. The dollar was also near a
three-week low versus the yen before an industry report today that may
show growth in U.S. services industries slowed. Sweden's krona rose to
the highest level in a month against the dollar after the Riksbank
lifted its main rate.
``We're expecting a negative outcome from the jobs report and the
market will continue to believe Trichet's job isn't done yet,'' said
Roberto Mialich, a Milan-based currency strategist at Unicredit Markets
& Investment Banking, a unit of Italy's largest lender. ``This will
be supportive of the euro.''
The single European currency may rise to $1.5950 today, with a test of $1.60 ``possible,'' Mialich said
The euro rose 0.6 percent yesterday as ECB President Jean- Claude
Trichet said in an interview with Die Zeit there's a risk of inflation
``exploding'' if central banks aren't decisive.
The central bank announces its decision at 1145 GMT and Trichet holds a
press conference at 12:30 GMT, the same time the U.S. Labor Department
releases the jobs data.
The Labor Department will probably report today that U.S. employers
eliminated 60,000 jobs including government positions last month,
according to the median forecast of 79 economists surveyed by
Bloomberg. 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.
Losses in the dollar may be limited by speculation U.S. officials will
verbally intervene to stem its decline and slow gains in oil prices
before a Group of Eight summit. Leaders from Canada, France, Germany,
Italy, Japan, Russia, the U.K. and the U.S. will meet in Hokkaido,
Japan, from July 7.
Crude oil rose to record $145.09 a barrel on the New York Mercantile
Exchange. The euro-dollar exchange rate and oil have moved in the same
direction 90 percent of the time in the past year, according to
Bloomberg calculations based on the correlation of their value.