Dollar Rises To a Six-week High after US Job Growth Quickens
 9th JAN 2007

The dollar surged to a six-week high against the euro on Friday after a government report showed United States job growth unexpectedly quickened last month, cooling speculation that the Federal Reserve Board will cut interest rates this quarter.

The US currency gained a third straight day. It fell 10 per cent against the euro last year as the Fed ended two years of rate increases, while the European Central Bank kept lifting borrowing costs.

“Investors are going to have to scale back their pessimism about the US economy,’’ said Sophia Drossos, a currency strategist at Morgan Stanley in New York. “The momentum is at the dollar’s back.’’

The dollar advanced to $1.3003 per euro in New York, from $1.3084 late on Friday, reaching its strongest since November 24. It traded at 118.68 yen from 119.05, erasing about half of an earlier loss. The dollar set a two-month high of 119.68 yen on Wednesday. It has rebounded 2.7 per cent from a 20-month low of $1.3368 per euro set last month.

The dollar approached levels that capped euro gains through much of 2006, and which now serve as so-called support for the currency.

“The euro is at a key technical level,” said Paresh Upadhyaya, who helps manage $29bn in currency assets at Putnam Investments in Boston. “If it goes to $1.2980 we would be back in the $1.25 to $1.30 trading range.’’

The euro traded in a range from $1.2405 to $1.2979 from April 27 through November 24. To stay in the $1.30 to $1.34 range “the $1.30 level needs to hold,” Upadhyaya said.

Employers in the US added 167,000 workers in December, following a 154,000 gain in November, the government said. The median a Bloomberg survey of economists was for a gain of 100,000 jobs.

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