Dollar firms as traders eye US payrolls

April 1, 2010
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, LONDON, Apr 1 – The dollar firmed on Thursday as investors fretted over the pace of recovery in the US labour market on the eve of a key monthly job report.

The European single currency slid to 1.3483 dollars, from 1.3508 dollars in New York late on Wednesday.

Against the Japanese currency, the dollar rose to 93.47 yen, from 93.43 yen late on Wednesday.

Investors were spooked by Wednesday\’s report from US private-sector payrolls firm ADP which showed that US companies shed 23,000 jobs in March.

"The figures were a surprise… as there was the expectation that this week\’s non-farm payroll figures and employment report due this Friday would show the first positive jobs figure since the end of 2007," said CMC Markets analyst Michael Hewson.

He added: "Expectations for this Friday\’s employment report have been in the region of a gain in jobs of between 180,000 and 200,000, but after yesterday\’s numbers there must now be some doubt about the accuracy of the forecasts."

Investors are keenly awaiting the US Labor Department\’s payrolls report to gauge the strength of the nation\’s budding recovery from the worst recession in decades.

Most traders attribute the expected rise to the number of government employees hired to conduct the 2010 census survey and as the jobs market stages a rebound from February\’s lows.

A drop in unemployment would boost the greenback as markets will start to factor an earlier withdrawal of the Federal Reserve\’s easy monetary measures as labour conditions improve, analysts said.

The yen meanwhile moved little following the release of the Bank of Japan\’s Tankan survey which showed that business sentiment among large manufacturers grew for the fourth straight quarter as the economy exits a severe recession.

Although firms overall remained cautious over the country\’s economic outlook with plans to continue cutting capital spending for the fiscal year to March 2011, the figure matched most analyst expectations.

Elsewhere on Thursday, the euro hit a record low point of 1.4185 Swiss francs, as dealers bought up the "safe-haven" franc amid doubts over the outlook for the eurozone economy.

The Swiss central bank has said it will step in if the franc appreciates too strongly, a trend which is hitting Swiss exporters.

The franc is seen by currency dealers as a "safe haven" in times of economic trouble and its recent boost is seen as partly due to the Greek debt drama, which has raised fears of a wider public finance crisis in the eurozone.

In London on Thursday, the euro was at 1.3483 dollars against 1.3508 dollars on Wednesday, at 126.03 yen (126.21), 0.8868 pounds (0.8896) and 1.4205 Swiss francs (1.4236).

The dollar stood at 93.47 yen (93.43) and 1.0537 Swiss francs (1.0538).

The pound was at 1.5204 dollars (1.5179).

On the London Bullion Market, the price of gold firmed to 1,116.03 dollars an ounce from 1,115.50 dollars an ounce on Wednesday.

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