By Ye Xie
Aug. 5 (Bloomberg) -- The yen was little changed versus the euro after a report showed U.S. companies cut more jobs in July than economists forecast, encouraging demand for a refuge.
The yen was at 137.32 against the euro at 8:23 a.m. in New York, compared with 137.21 yesterday. Japan’s currency was at 95.27 per dollar, compared with 95.23. The dollar traded at $1.4407 per euro, compared with $1.4408.
The pound advanced to its highest level against the dollar in more than nine months as services industries grew in July by more than economists predicted and U.K. manufacturing unexpectedly rose in June. Israel’s shekel tumbled after the central bank stepped up dollar purchases.
U.S. companies cut an estimated 371,000 workers from payrolls last month after a reduction of 473,000 in June, ADP Employer Services reported. The median forecast of 30 economists in a Bloomberg News survey was for a drop of 350,000.
The Labor Department’s data on U.S. initial jobless claims for last week are due tomorrow and its July payroll report will come the following day.
The Israeli shekel dropped for a third day, decreasing 0.2 percent to 3.8837 against the dollar as the Bank of Israel stepped up its purchases in the foreign-exchange market. It said on Aug. 3 it may increase its purchases in the event of “unusual movements.”
The central bank bought $100 million a day since July last year to weaken the shekel and help support exports, hurt by the drop in demand brought on by the global financial crisis.
The pound climbed as much as 0.6 percent to $1.7043, the highest level since October, on speculation the U.K. is emerging from its worst recession in a generation.
An index of services rose to 53.2 last month from 51.6 in June, Markit said today in London. Factory output climbed 0.4 percent in June, the U.K.’s statistics office said. Lloyds Banking Group Plc’s Halifax division said home values jumped almost twice as much as economists forecast last month.
The Australian dollar may fall against the yen in August, snapping its longest stretch of monthly gains since 2004, as Japanese trusts expect to raise less cash to buy foreign securities, RBC Capital Markets said.
Japanese mutual funds that aim to attract cash from investors to buy foreign securities, also known as Toshin, are likely to raise 50 billion yen ($525 million) in August, down from 200 billion yen on average between March and July, Sue Trinh, senior currency strategist at RBC Capital Markets in Sydney, wrote in a note to clients today. Toshin issuance in February was 47 billion yen, she said.
“The rally in the Australian dollar versus the yen from its March lows coincided with a resurgence in Toshin issuance,” Trinh wrote. “Based on the pitiful issuance we expect for August, it suggests the Australian dollar could pull back sharply from current levels” toward 73 yen, she wrote.
Australia’s dollar weakened 0.5 percent to 79.98 yen. The Aussie strengthened 30 percent against the yen since March 1.
To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net
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