The dollar gained against the yen and Europe's 17-nation currency as U.S. claims for jobless benefits unexpectedly dropped to the lowest level in more than five years, suggesting economic growth may accelerate.
The Australian and New Zealand dollars pared rallies after the U.S. jobs report, offsetting government data showing job gains in the two South Pacific nations exceeded economists' estimates and damping speculation their central banks will reduce interest rates. Declining U.S. jobless claims and an unemployment rate at the lowest level since December 2008 signal the Federal Reserve may reduce easing sooner than policymakers in Europe and Japan.
The "market is changing its mind regarding U.S. data," Neil Jones, head of hedge-fund sales a Mizuho Corporate Bank Ltd. in London, said in an e-mail. "It's showing signs of improvement again."
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The dollar rose 0.4 percent versus the euro to $1.3104 as of 12:44 p.m. in New York. The yen was little changed at 130.17 per euro. It dropped 0.3 percent to 99.28 per dollar after appreciating 0.4 percent.
Trading in over-the-counter foreign-exchange options totaled $20 billion, compared with turnover of $28 billion yesterday, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg.
Volume in options on the dollar-yen exchange rate amounted to $5.5 billion, the largest share of trades at 28 percent. Euro-dollar options were the second most-actively traded, at $2.3 billion, or 11 percent. Dollar-yen options trading was 55 percent less than the average of the past five Thursdays at a similar time in the day, and euro trading fell 52 percent, according to Bloomberg analysis.
Aussie, Kiwi
The number of people employed in Australia rose by 50,100 in April from a month earlier, more than four times economists' estimates, and the jobless rate unexpectedly fell to 5.5 percent, the statistics bureau said. New Zealand employers added a record 38,000 jobs last quarter and the unemployment dropped to 6.2 percent. Economists forecast 6.8 percent.
Australia's dollar jumped as much as 0.8 percent and rose to $1.0182 after sliding 1.5 percent during the previous three days. New Zealand's currency strengthened 0.5 percent to 84.43 U.S. cents after dropping to 83.60 cents yesterday, the lowest level since April 1.
"On the back of these better numbers, we saw some support for Aussie and kiwi," Brian Kim, a foreign-exchange strategist at Royal Bank of Scotland Group Plc's RBS Securities unit in Stamford, Connecticut, said in a telephone interview. "Central bankers there can't be too happy just because they are concerned about currency strength."
U.K. Output
The pound advanced versus the euro as the Office for National Statistics said Britain's industrial output rose 0.7 percent in March. Economists surveyed by Bloomberg forecast a gain of 0.2 percent. The U.K.'s gross domestic product increased 0.8 percent this quarter through April, according to NIESR estimates.
The BOE's Monetary Policy Committee kept its bond-purchase target at 375 billion pounds ($583 billion) at the end of a two- day meeting in London, as forecast by all except one of 44 economists surveyed by Bloomberg. The majority on the nine-member MPC said last month that monetary policy was already "highly stimulatory," according to minutes of the April 3-4 meeting released April 17.
"Performing Well"
The "recent U.K. macro data I suggest is just sufficient to warrant no further QE at this time," Mizuho's Jones said in an e-mail. "The pound is performing well against the euro and holding its own against the dollar."
The pound gained 0.2 percent to 84.55 pence per euro after advancing as much as 0.4 percent, the most since May 2. Sterling fell 0.2 percent to $1.5499 after climbing as much as 0.4 percent.
South Africa's rand gained versus all but one of its 31 most-traded counterparts after Finance Minister Pravin Gordhan said the currency's weakness is related to "unnecessarily negative" sentiment toward the country and the currency may be weaker than it should be. The rand rose 0.3 percent to 8.9775 per dollar after earlier gaining as much as 0.5 percent. It appreciated 0.7 percent to 11.7641 per euro.
The yen erased an earlier advance versus the dollar after U.S. applications for unemployment insurance payments decreased by 4,000 to 323,000 in the week ended May 4, the least since January 2008, Labor Department figures showed today. Economists forecast 335,000 claims, according to the median estimate in a Bloomberg survey. The average over the past month was the lowest since before the last recession began.
Plosser's View
Fed Bank of Philadelphia President Charles Plosser said it is "disturbing" to him that so much is being expected of central banks. "We are expected to solve all the world's problems," Plosser said in an interview on Bloomberg television today. "Our fiscal authorities are not doing a very good job in any country."
Japan's currency has fallen 19 percent against the dollar in the past six months as the Bank of Japan increased stimulus, which tends to debase a currency. The decline has stalled since the yen depreciated to 99.95 per dollar on April 11, the weakest level since October 2008.
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