02.07.2009 21:26

American focus:

The dollar and yen advanced against the euro as a U.S. government report showed employers cut more jobs last month than economists forecast, paring demand for higher-yielding assets.
The euro extended declines versus the dollar as European Central Bank President Jean-Claude Trichet said a “phase of recovery” for the region will probably start in the middle of 2010. The dollar earlier climbed versus the euro after China renewed its call for a stable greenback and damped speculation the nation is seeking talks on a new international currency at next week’s Group of Eight meeting.

“The bias is for dollar strength after these numbers,” said Benedikt Germanier, a currency strategist in Stamford, Connecticut, at UBS AG, the world’s second-largest currency trader. “Investors are waking up and rubbing their eyes and saying, ‘It’s summer, and things are not getting better.’”
Employers eliminated 467,000 jobs in June after a revised decrease of 322,000 in the previous month, the Labor Department reported today in Washington.The unemployment rate increased to 9.5 percent.
The dollar declined beyond $1.42 versus the euro yesterday after Reuters cited G-8 sources as saying the Asian nation asked to debate proposals for a new global reserve currency at next week’s summit. China is the biggest foreign holder of Treasuries, with $763.5 billion as of April.
The ECB kept its benchmark interest rate unchanged at 1 percent today.
The region’s 16-nation currency will probably fall to $1.33 by the end of September as economic data globally will strengthen arguments for a weaker recovery, according to Lauren Rosborough, a foreign-exchange strategist at Westpac Banking Corp. in London.
“We all know the euro should weaken,” Rosborough said. “We are not talking about a rapid recovery and certainly not a strong one.”