FOREX-Dollar gains after U.S. jobs data; euro falls on rate view

Fri Dec 7, 2012 8:10pm IST

* U.S. non-farm payrolls rise 146,000 in November
    * Euro extends post-ECB fall; Germany cuts growth outlook
    * Yen briefly strengthens after Japan earthquake

    By Wanfeng Zhou
    NEW YORK, Dec 7 (Reuters) - The dollar rose against the euro
and yen on Friday after data showed U.S. employment grew faster
than expected in November, but the less encouraging details
limited gains.
    The dollar had soared to session peaks immediately after the
release of the data as the stronger-than-expected headline
number fueled speculation that the Federal Reserve could opt for
a smaller stimulus program next week.
    But the momentum faded as traders scrutinized the details.
While nonfarm employment increased by 146,000 jobs last month,
job growth for previous months was revised lower and a drop in
the jobless rate to a near four-year low was because people gave
up the search for work. 
    "The big takeaway is that the Sandy did not have the impact,
 the negative effect that people thought it would have," said
Jacob Oubina, senior U.S. economist at RBC Capital Markets in
New York.
    "While this was dramatically better than feared, it also was
not a breakout of the trend," he said. "This should have no
impact on Fed policy and the central bank should remain on
cruise control and continue with the (quantitative easing)
program into the new year."
    The Fed begins a two-day meeting on Tuesday in which
policymakers are expected to maintain support for the tentative
U.S. economic recovery by ramping up one bond-buying program to
offset the expiration of another.
    "The real question, though, is whether this changes the
Fed's attitude toward more stimulus. It doesn't remove the need
for stimulus but might convince the Fed to opt for a smaller
program," said Kathy Lien, managing director of BK Asset
Management in New York.
    Quantitative easing, or QE, is viewed as negative for the
dollar because it equates to printing money, which lowers U.S.
bond yields and diminishes the appeal of holding
dollar-denominated assets.
    The euro fell to a session low of $1.2878 on Reuters data,
matching the low set on Nov. 28. It was last down 0.5 percent at
$1.2907.
    Adding to pressure on the euro were comments from European
Central Bank policymaker Jozef Makuch, who said the bank may cut
interest rates next year if the euro zone economy does not
improve. 
    The drop came as Germany's central bank said it expected
Europe's largest economy to grow just 0.4 percent in 2013, and
pointed to risks of a recession as the euro zone debt crisis
takes its toll. 
    The euro zone common currency had lost 0.8 percent against
the dollar on Thursday after ECB President Mario Draghi said
policymakers had discussed cutting borrowing costs and slashed
growth and inflation forecasts for the euro zone.
 
    The dollar rallied to 82.82 yen on Reuters data,
matching a near eight-month high set on Nov. 22. It was last at
82.67 yen, up 0.3 percent on the day.
    The yen briefly rose against the euro and dollar after news
of an earthquake in Japan. A far more powerful earthquake in
March 2011 led to a sharp rise in the yen on expectations
Japanese investors would repatriate funds held abroad back home.
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