Dollar Rises to 5-Week High

The dollar rose to a five-week high against the euro after a government report showed U.S. employers eliminated fewer jobs in April than economists forecast, indicating the U.S. economy may avoid falling into a recession., Bloomberg 5/2/2008 6:31:29 AM

The currency strengthened as traders increased bets that the Federal Reserve will hold the target lending rate at 2 percent next month. The dollar is headed for a second straight weekly gain versus the euro after the central bank said on April 30 that ``substantial'' easing since September would help foster economic growth.

The dollar increased 0.6 percent to $1.5394 per euro at 8:43 a.m. in New York, from $1.5475 yesterday. It touched $1.6018 against the euro on April 22, the lowest level since the 15-nation currency debuted in 1999. The dollar rose 1 percent to 105.51 yen, from 104.44 yesterday. The euro traded at 162.40 yen, compared with 161.60 yen.

Before the jobs report, futures on the Chicago Board of Trade showed a 76 percent chance that policy makers would keep the fed funds target unchanged at 2 percent when they next meet June 25. The balance of bets was for a decrease of a quarter- percentage point. On April 30, the Fed cut the benchmark rate from 2.25 percent in its seventh reduction since September.

U.S. payrolls shrank by 20,000 last month following a revised decline of 81,000 in March, the Labor Department said today in Washington. The median forecast of 82 economists surveyed by Bloomberg News was for a drop of 75,000.

The currency fell 0.3 percent against the euro on April 4, when the Labor Department reported that the U.S. lost 80,000 jobs in March, the most in five years. The dollar dropped 0.8 percent versus the yen, the most in more than a week.

The dollar rose briefly against the euro on April 30 after ADP Employer Services reported that companies in the U.S. added 10,000 jobs in April, following a revised 3,000 gain in the previous month. ADP includes only private employment and does not take into account government hiring.

Dollar Rises to 5-Week High