Euro Erases Gain Against Yen as Stocks, Bond Yields Fluctuate

By Oliver Biggadike and Ye Xie

Sept. 4 (Bloomberg) -- The euro erased its gain versus the yen as U.S. stocks and government bond yields fluctuated after the Labor Department said employers eliminated fewer jobs in August than economists forecast.

“It’s a slightly better-than-expected number,” said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. “There’s too much uncertainty about how this will play out. From a recession point of view, we still have a long way to go.”

Canada’s currency rose against all of the 16 most-traded counterparts tracked by Bloomberg as Statistics Canada reported the first gain in jobs since April. New Zealand’s dollar increased against the greenback and yen as Chinese stocks extended yesterday’s biggest gain in six months.

The euro was little changed at 132.10 yen at 9:42 a.m. New York, compared with 132.03 yesterday, after earlier increasing 0.8 percent. The dollar appreciated 0.3 percent to $1.4210 per euro, from $1.4252, and rose 0.3 percent to 92.92 yen, from 92.64.

Employers eliminated 216,000 jobs in August after a revised decrease of 276,000 jobs in the previous month, the Labor Department reported today in Washington. The median forecast of 79 economists surveyed by Bloomberg News was for a reduction of 230,000. The unemployment rate increased to 9.7 percent.

The Dollar Index rose 1.2 percent to 78.975 on Aug. 7 as 10-year Treasury yields climbed after a report showed July payrolls dropped less than economists forecast. The gauge, which the ICE uses to track the currencies of six major U.S. trading partners, advanced 0.2 percent to 78.609 today.

Trichet on Recovery

The euro erased its gain versus the dollar yesterday as European Central Bank President Jean-Claude Trichet said the economic recovery will be “rather uneven” after holding the target lending rate at a record low of 1 percent.

“Trichet sounded extremely dovish,” a team of Commerzbank AG analysts including Ulrich Leuchtmann in Frankfurt said in a report today. “It is hardly surprising that the dollar was able to benefit from it.”

The Federal Reserve signaled in minutes of its August meeting published on Sept. 2 that it’s trying to prepare investors for an end to some of its asset purchases as the U.S. economy shows signs it’s beginning to recover from its worst recession since the Great Depression.

Treasury Secretary Timothy Geithner told reporters on the same day in Washington that it’s still “too early” for the Group of 20 nations to implement exit strategies. G-20 finance ministers and central bankers meet today and tomorrow in London.

The kiwi, as the New Zealand currency is known, advanced 0.9 percent to 63.30 yen and appreciated 0.5 percent to 68.17 U.S. cents.

Canada’s dollar strengthened 0.7 percent to C$1.0944 per U.S. dollar as Statistics Canada reported employment rose by 27,100, compared with economists’ median forecast of a drop of 15,000. The unemployment rate increased to 8.7 percent as the labor force grew faster than employment.

To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net