The greenback falls as U.S payrolls a expected to show job losses

The dollar headed for its first weekly loss against the yen in three weeks before a U.S. payrolls report that may show the economy lost jobs every month in 2008 and the unemployment rate rose to a 16-year high. The euro was set for a second weekly decline versus the British pound and the greenback as traders predict the European Central Bank will cut interest rates on Jan. 15 to the lowest level since 2005. The ECB on Dec. 4 lowered its benchmark rate by 75 basis points to 2.5 percent and investors expect another cut of at least 50 basis points next week “There’s a high likelihood that the jobs data will be very bad,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe General SA, France’s second-largest bank by market value. “It’s a reason to sell the dollar.” The EUR/USD is currently trading at $1.3680 as of 8:40am, GMT.

The British pound rose against the euro, set for its biggest weekly gain against the European common currency. The pound strengthened to 89.81 pence per euro from 90.06 pence yesterday after the Bank of England cut key interest rates as widely anticipated, but at the low end of expectations. The BoE cut the key bank rate by 50 basis points to a record low of 1.5 percent as it battles to keep the economy from falling into a deep slump, and experts say borrowing costs will fall again next month. Many in the market had expected the UK central bank to cut rates by a bigger margin after it slashed interest rates by a full percentage point in December. The GBP/USD is currently trading at $1.5180 as of 9:00am, GMT.

Canada’s dollar gained as its U.S. counterpart weakened before a report forecast to show unemployment in the nation’s largest trading partner increased to a 16-year high. “The slight rebound reflects the broader downward pressure on the U.S. dollar,” said Todd Elmer, chief currency strategist at Citigroup Global Markets Inc. in New York. “There is some nervousness over the employment indicators that may be contributing to dollar decline.” The USD/CAD is currently trading at $1.1866 as of 9:10am, GMT.

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