Dollar Gains On Euro As All Eyes Turn To Jobs Report

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The dollar strengthened versus the euro on Thursday as traders sifted through a pile of mixed economic data while awaiting tomorrow's pivotal monthly jobs report.

Optimism about a robust economic recovery generated in the wake of encouraging news on the housing and banking sectors could wane quickly without evidence that the employment situation is getting better.

The US consumer, once the engine of the world's largest economy, is unlikely to drive economic growth until the jobs market improves.

Traders also considered testimony from Fed Chair Ben Bernanke, who cautioned the dollar's status as a global reserve currency may change in the long-term without bringing fiscal deficits back under control.

The dollar extended this week's gains against the euro Thursday, rising to a 2-week high of 1.4517 before leveling off. With the advance, the dollar moved further from a yearly low of 1.4843 set earlier this month.

The eurozone jobless rate rose to the highest level in more than ten years in August, as companies fired more and more employees to cope with the worst recession since the post-war era.

The jobless rate inched up to a seasonally adjusted 9.6% in August from 9.5% in July, Eurostat said Thursday.

The buck saw little movement against the yen, holding near the 90 mark for a second day. Last week, the buck hit an 8-month low of 88.21, but has stabilized since Japanese officials hinted they may intervene to prevent the yen from accelerating higher.

Versus the sterling, choppy trading left the dollar near 1.5950.

In economic news from the US, the number of people filing for first-time unemployment claims rose last week, ticking up after a string of declines.

The overall trend continues to point toward easing layoffs, despite last weeks' mild tick higher, but economists still see evidence of sluggish hiring.

Activity in the manufacturing sector continued to expand in September, but the pace of expansion unexpectedly slowed compared to the previous month, the Institute for Supply Management said Thursday.

The ISM said its index of manufacturing activity edged down to 52.6 in September from 52.9 in August, with a reading above 50 indicating growth in the sector. Economists had been expecting the index to increase to a reading of 54.0.

On the housing front, pending home sales increased for the seventh straight month in August, according to a report from the National Association of Realtors, with the pace of growth for the month exceeding economist estimates.

(Market News Provided by RTTNews)