Dollar rises as employers eliminate fewer jobs than forecast

The dollar rose versus the yen for a fourth day in the longest stretch of gains since October and advanced against the euro as employers cut fewer positions last month than economists forecast and the jobless rate fell.

The Canadian dollar rose against all of its major counterparts as the nation's employers added more positions than expected. The yen was headed for its first weekly decline versus the dollar since October as Japan's government signaled the currency should decline further.

"It's a surprise in both the nonfarm payrolls and unemployment numbers," said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. "We're definitely seeing dollar support at this point."

The dollar increased 1.2 percent to 89.32 yen at 8:52 a.m. in New York, from 88.26 yesterday. The dollar appreciated 0.4 percent to $1.4996 per euro, from $1.5053. The euro climbed 0.8 percent to 133.88 yen, from 132.87.

U.S. employers eliminated 11,000 jobs in November after a revised reduction of 111,000 in the previous month, the Labor Department reported today. The median forecast of 82 economists in a Bloomberg survey was for a reduction of 125,000 jobs. The unemployment rate decreased to 10 percent.

Futures on the Chicago Board of Trade showed a 55 percent chance that policy makers would raise the target lending rate by at least a quarter-percentage point by the June meeting. A week ago the likelihood was 31 percent.

The Federal Reserve repeated at the end of a two-day policy meeting on Nov. 4 its intent to keep interest rates "exceptionally low" for "an extended period." The target rate for overnight lending between banks was held at a range of zero to 0.25 percent.

European Central Bank President Jean-Claude Trichet took a step yesterday toward removing emergency stimulus measures designed to end the recession, telling reporters in Frankfurt the need had diminished. The main refinancing rate stayed at a record low 1 percent.

Japan's Vice Finance Minister Rintaro Tamaki met with U.S. Treasury officials this week in Washington, spurring speculation the two nations are discussing how to cap the yen.

"It would be good for the yen to weaken a little more," Japanese Deputy Prime Minister Naoto Kan said in Tokyo today.

The yen gained 4.3 percent versus the U.S. currency in November, helping to erode profits of exporters including Sony Corp. and Toyota Motor Corp. It reached a 14-year high of 84.83 against the dollar on Nov. 27.

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners including the euro and yen, was little changed on Nov. 6, when the Labor Department reported that U.S. employers eliminated more jobs than economists forecast and the unemployment rate rose to a 26-year high of 10.2 percent.

The gauge has fallen about 20 percent from a three-year high reached in March, dropping on speculation the Fed will be slow in raising borrowing costs.