While you were sleeping: Yen reaches 7-week high, US companies cut jobs

Thursday 3rd September 2009

The yen strengthened to a seven-week high against the euro after a report showed US companies cut more jobs than expected last month while factory orders rose less than predicted, stoking demand for Japan’s currency as a haven.

Companies eliminated 298,000 jobs in August following a cut of 360,000 in July, according to a payroll report from ADP Employer Services. The private-sector jobs report comes before the Labor Department’s payroll figures on September 4, which is expected to show employers cut 225,000 positions, while the unemployment rate climbed to 9.5%.

US factory orders rose 1.3% from 0.9% in June, according to the Commerce Department. The gain lagged behind expectations of a 2.2% advance. Non-durable goods orders fell 1.9%.

The yen appreciated to 131.48 per euro from 132.19 and earlier reached 131.04, the strongest since July 15. Japan’s currency gained to 92.13 against the dollar from 92.92. The greenback fell 0.4% to $1.4273 against the euro.

The dollar slid 0.3% to $1.4278 versus the euro after US stocks erased earlier losses, paring the safety demand for the world’s main reserve currency.

Minutes of the Federal Reserve’s meeting of policy makers last month showed the central bank saw “considerable uncertainty” in the strength of the economic recovery.

They considered extending the end-date for purchases of mortgage bonds beyond the December end date while reducing debt purchases to wean the financial system off its stimulus measures. Some officials, though, argued that the programme didn’t need to be completed with signs the world’s biggest economy is emerging from recession.

The VIX Index, which measures stock-market volatility, slipped 0.7% to 28.95 having jumped the previous day as stocks tumbled.

Stocks on Wall Street fell after the weaker-than-expected factory orders and loss of jobs. The Dow Jones Industrial Average declined 0.3% to 9280.67 and the Standard & Poor’s 500 fell 0.3% to 994.75. The Nasdaq Composite slipped 0.1% to 1967.07.

JP Morgan Chase dropped 1.9% to US$40.84, leading the Dow lower. Merck declined 1.9% to US$30.81 and Walt Disney fell 1.1% to US$25.40.

In Europe, the Dow Jones Stoxx 600 fell 0.5% to 230.59. Among regional benchmarks, the UK’s FTSE 100 was little changed, falling 0.04% to 4817.55, Germany’s DAX 30 fell 0.1% to 5319.84 and France’s CAC 40 slipped 0.3% to 3573.13.

BP Plc jumped 4.3% after saying it made a “giant find” at its Tiber Prospect in the Gulf of Mexico. The find could contain over 1 billion barrels of recoverable reserves, Reuters reported, citing analysts.

European finance ministers pledged to clamp down on banker bonuses, which may force lenders to spread payouts over a number of years or claw back payments in hard times.

Gold rose the most in five months.

Gold futures for December delivery climbed 2.3% to US$978.50 an ounce on the New York Mercantile Exchange. Copper for December delivery edged up 0.3% to US$2.826 a pound.

Crude oil edged up after American Petroleum Institute figures showed US stockpiles fell by 3.19 million barrels last week, with US Energy Department figures expected to show the same level of decline.

Crude oil for October delivery rose 0.9% to US$68.65 a barrel on the New York Mercantile Exchange.

Businesswire.co.nz

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