Wednesday March 7, 2007 - 20:53:16 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar falls ahead of U.S. payrolls data
FOREX-Dollar falls ahead of U.S. payrolls data
Wed Mar 7, 2007 3:02pm ET17
(Updates prices, adds comments)
By Kevin Plumberg
NEW YORK, March 7 (Reuters) - The dollar fell against the euro and Swiss franc on Wednesday as investors prepared for a potentially weak U.S. payrolls figure on Friday, which would highlight how much the economy is losing steam.
An anecdotal report on Wednesday on the U.S. economy from the Federal Reserve showed four of 12 districts reporting slowing activity. It pushed down the dollar and fueled beliefs that the Fed may have to cut interest rates this year.
Significantly lower-than-expected jobs growth would undoubtedly push the market to factor in increased chances of two rate cuts by year end.
"Everyone is starting to factor in a weaker payrolls number," said Tim O'Sullivan, trading manager with Forex.com in Bedminster, New Jersey. "You are starting to see some speculators take some short dollar views."
By early afternoon, the euro rose 0.45 percent to $1.3183 , within a range of $1.3070 to $1.3260 since mid-February.
Against the Swiss franc, the dollar fell 0.55 percent to 1.2170 francs .
The derivatives market has factored in February payrolls growth of 93,100 jobs, according to the Chicago Mercantile Exchange, while a separate report of U.S. private employers showed private sector jobs growth of 57,000.
Those figures were below the 100,000 jobs expected by economists polled by Reuters.
The yen moved little after a week in which most of the market's attention has been focused the Japanese currency as it rose 3.6 percent against the dollar. The yen was lifted by the liquidation of carry trades, in which investors borrow cheaply in yen to fund higher-yielding investments elsewhere and profit on the spread.
The dollar was down 0.15 percent at 116.35 yen . The euro was up 0.3 percent at 153.32 yen after posting its biggest weekly loss in 2-1/2 years last week.
Former Federal Reserve Chairman Alan Greenspan gave the yen a bit of a boost after he told a New York audience the yen carry trade at some point has "got to turn." For more, click on [nN07241060]
Dealers said uncertainty on whether the yen has more room to rise is rampant and keeping the dollar and euro from trimming more of last week's losses. But yen strength could resume at any moment.
"Bets against the yen had become asymmetric and it needs to continue to unwind. I think that will be a much bigger driver than short-term indicators," said Peter Rosenstreich, market strategist with HedgeStreet in New York.
Â© Reuters 2007. All Rights Reserved.
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