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Dollar Stronger Than $1.18 per Euro Before Payrolls; Yen Weakens

The dollar stayed stronger than $ 1.18 per euro for a second day on speculation U.S. payrolls data today will boost the case for Federal Reserve interest-rate increases this year.

The single currency was poised for a fourth weekly decline, the longest streak since September. European Central Bank President Mario Draghi said stimulus measures may include sovereign-bond purchases and concern lingered that a win for Greece’s opposition in this month’s elections could lead the country to exit the euro. The yen weakened for a third day as global stocks gained, reducing demand for haven assets.

“The trend is still for a stronger dollar,” said Kazuo Shirai, a trader at MUFG Union Bank NA in Los Angeles. “The euro is likely to head lower until the latter half of this month, when we get some clarity on Greece.”

The dollar was at $ 1.1792 per euro as of 9:18 a.m. in Tokyo after reaching $ 1.1754 yesterday, the strongest level since December 2005. The dollar appreciated 0.1 percent to 119.80 yen. The euro was little changed at 141.27 yen.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose 0.2 percent yesterday to 1,147.54, the highest close in data going back to 2004.

The pound was near a more than one-year low after Bank of England policy makers maintained the benchmark interest rate at a record-low 0.5 percent yesterday, in line with the forecast of all 42 economists in a Bloomberg survey.

Sterling was at $ 1.5085 after touching $ 1.5035 yesterday, the lowest level since July 2013.

Long Dollar

The dollar gained after the Labor Department said jobless claims decreased by 4,000 to 294,000 in the week ended Jan. 3. Separate reports today will show employers added 240,000 workers and the jobless rate fell to a 6 1/2-year low of 5.7 percent in December, according to analysts surveyed by Bloomberg News.

“Over 2015 and through 2016, we have an investment strategy of being broadly long of U.S. dollars,” Sue Trinh, senior currency strategist at Royal Bank of Canada in Hong Kong, said of bets for the greenback to strengthen in a Bloomberg Television interview. “That will get more legs, especially as the first Federal Reserve rate hike comes onto the radar.” The bank forecasts the dollar to gain to 132 yen in 2015, she said, a level last seen in 2002.

There’s a 58 percent likelihood the U.S. Federal Reserve will raise its target federal funds rate from a zero-to-0.25 percent range to at least 0.5 percent by September, futures data compiled by Bloomberg show.

Draghi Letter

Europe’s 19-nation currency depreciated against most major peers yesterday as Draghi, in a letter to European Parliament lawmaker Luke Flanagan, echoed his remarks made after the Governing Council’s last monetary-policy meeting on Dec. 4. ECB staff are preparing a stimulus package for officials to consider at their next meeting on Jan. 22.

“The ECB is fairly unanimous in trying to get the euro lower as its main strategy,” Ken Dickson, an Edinburgh-based director of foreign exchange at Standard Life Investments Ltd., said by phone. “It does appear that quantitative easing is more likely sooner than later,” he said of the bond-buying strategy.

To contact the reporter on this story: Kevin Buckland in Tokyo at [email protected]

To contact the editors responsible for this story: Garfield Reynolds at [email protected] Nicholas Reynolds

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