By Stanley White
Dec. 5 (Bloomberg) -- The dollar headed for a fifth weekly decline against the yen, its longest losing streak in four years, before a U.S. report that economists say will show the unemployment rate rose to the highest level since 1993.
The greenback was also poised for a second weekly loss versus the euro on speculation the jobs report will give the Federal Reserve more reason to cut interest rates. The euro fell against the yen this week, while the British pound declined versus the greenback. The European Central Bank made the biggest rate cut in its 10-year history yesterday and the Bank of England reduced its benchmark to the lowest level since 1951.
“The market is moving to a broadly weak trend for the dollar,” said Hideki Amikura, deputy general manager of foreign exchange at Nomura Trust and Banking Co., a unit of Japan’s largest brokerage. “Nonfarm payrolls numbers are likely to be ugly. This should pressure the dollar to trade lower.”
The dollar bought 92.51 yen as of 10:34 a.m. in Tokyo from 92.23 yen late yesterday in New York, on course for a 3.2 percent decline this week. The euro was at $1.2751 from $1.2777 yesterday and up from $1.2691 at the end of last week. The euro traded at 117.95 yen, down 2.7 percent from Nov. 28. The pound was at $1.4649, down 4.7 percent this week.
The dollar may fall to 88 yen this month, Amikura said.
Chinese Yuan
The Chinese yuan headed for a 0.7 percent weekly decline to 6.8800 per dollar, on speculation U.S. Treasury Secretary Henry Paulson’s calls for a stronger currency won’t stop China from weakening it to support exporters. Paulson is in Beijing for talks with Chinese officials.
U.S. payrolls shrank by 333,000 workers in November after a drop of 240,000 in the previous month, according to the median forecast of 73 economists surveyed by Bloomberg News. The jobless rate jumped to 6.8 percent, the highest level in 15 years, a separate survey showed. The Labor Department will release the report at 8:30 a.m. in Washington.
“Some are selling the dollar ahead of the payroll report,” said Brian Dolan, chief currency strategist at FOREX.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey. “You have a perfect storm building for the dollar.”
Home Foreclosures
Fed Chairman Ben S. Bernanke yesterday urged the use of more taxpayer funds for new efforts to prevent home foreclosures, saying in a speech in Washington that the private sector is incapable of coping with the crisis on its own.
Futures on the Chicago Board of Trade showed yesterday 64 percent odds the Fed will lower its 1 percent target rate to 0.25 percent by its next meeting on Dec. 16, compared with a 52 percent chance on Dec. 3.
U.S. lawmakers expressed optimism yesterday that they may financially stabilize U.S. automakers by providing temporary funds until the next presidential administration.
General Motors Corp. and Chrysler LLC told Congress on Dec. 2 they need as much as $15 billion to survive until next month as a global recession crimps consumer spending and exports. Ford Motor Co. has requested a credit line of as much as $9 billion.
“The market’s attention will be drawn to nonfarm payrolls and hearings on a bailout of the U.S. auto sector,” Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland in Tokyo and a former Bank of Japan currency trader, wrote in a research note today. “This may cause stocks to fall and place pressure on the yen to rise.”
The ECB lowered its main refinancing rate by 0.75 percentage point to 2.5 percent. The median forecast of economists surveyed by Bloomberg was for a reduction of half a percentage point.
The pound fell as much as 1.4 percent to 87.25 pence per euro yesterday, the weakest level since the 15-nation currency’s 1999 debut, after the BOE lowered its target lending rate by a full percentage point to 2 percent. The pound was last quoted at 87.02 pence per euro, on course for a 5.1 percent weekly decline.
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.net
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