The dollar fell against the yen and the euro on speculation a
government report will show the U.S. economy lost the most jobs since
2003, bolstering the case for the Federal Reserve to lower interest
rates.
The U.S. currency also declined versus the British pound as futures
traders bet the Fed will cut borrowing costs by half a percentage point
to 0.5 percent at its next meeting, compared with the U.K.'s benchmark
rate of 3 percent. A Labor Department report today may show U.S.
unemployment rose to a five-year high as the global economic slowdown
worsened.
``Growth is pretty much the market's concern at the moment and the jobs
data might add to that picture,'' said Ian Stannard, a senior currency
strategist in London at BNP Paribas SA, the most accurate forecaster in
a 2007 Bloomberg survey. ``We've been looking for the dollar to correct
lower.''
The dollar fell 0.5 percent against the euro this week. The pound lost
1.7 percent against the U.S. currency over the five days as the Bank of
England yesterday reduced its main rate to the lowest level since 1955.
The euro fell 0.6 percent against the yen this week after the European
Central Bank lowered rates by half a point to 3.25 percent.
U.S. payrolls fell by 200,000 last month, and the unemployment rate
rose to a five-year high of 6.3 percent. The report from the Labor
Department is due at 8:30 a.m. in Washington. The economy contracted
0.3 percent in the third quarter, the biggest decline since 2001.
``Sentiment is already pretty grim as far as the labor market is
concerned,'' said Samarjit Shankar, director of strategy for the global
markets group in Boston at Bank of New York Mellon, the world's largest
custodial bank, with more than $23 trillion in assets under
administration. ``It will take a huge surprise on the upside to provide
some support for U.S. dollar sentiment.''
Futures on the Chicago Board of Trade showed a 90 percent chance
yesterday the Fed will cut its 1 percent target lending rate for
overnight bank loans by a half-percentage point at its Dec. 16 meeting,
compared with 55 percent odds a week ago.