Dollar Trades Near 3-Week Low

The dollar traded near a three-week low against the yen before government data this week that may show U.S. employers cut jobs for a sixth consecutive month, damping expectations for an increase in interest rates.

The U.S. currency was also near a three-week low against the euro before a report tomorrow that may show U.S. manufacturing contracted at a faster pace this month. The euro may rebound from two days of losses against the yen before a European Central Bank meeting this week where policy makers will raise rates a quarter point to 4.25 percent, according to economists surveyed by Bloomberg News.

The dollar traded at 106.35 yen at 9:25 a.m. in Tokyo from 106.13 late in New York on June 27, when it fell to a three-week low of 105.87. Against the euro, it was at $1.5791 from $1.5794, the lowest since June 9. The euro bought 168.00 yen from 167.58. The U.S. currency may fall to 106.10 yen and $1.5840 per euro today, Soma said.

The dollar headed for a 6.6 percent quarterly gain against the yen, its biggest since the second quarter of 2003, after finance ministers from the Group of Seven nations said on April 11 they were concerned about the impact of ``sharp fluctuations in major currencies.'' The euro was little changed against the dollar this quarter after rising 8.2 percent in the January- March period. The euro advanced 6.7 percent against the yen this quarter, the most since June 2003, on speculation the rate differential between the two currencies will widen.

U.S. nonfarm payrolls shrank by 60,000 workers, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department's report on July 3. That would follow a decline of 49,000 in May that brought the number of jobs lost this year to 324,000.

The Institute for Supply Management's factory index fell to 48.6 in June from 49.6 the previous month, according to a separate survey. A reading below 50 signals contraction. The ISM will release the data tomorrow.

The euro may be supported by speculation a report today will show inflation accelerated in June, boosted by record oil costs and higher food prices, allowing ECB President Jean-Claude Trichet to raise interest rates to fight inflation.

The inflation rate in the euro area rose to 3.9 percent, from 3.6 percent in May, the European Union statistics office in Luxembourg may say today, according to the median of 38 estimates in a Bloomberg survey. The ECB aims to keep consumer- price growth below 2 percent.

Dollar Trades Near 3-Week Low, Bloomberg
6/30/2008 6:33:36 AM