2013.04.0202:30:16UTC+00Dollar declines past 93 Yen before U.S. jobs data as Rate difference falls

The dollar lose its control past 93 yen for the first time in a month before data this week predicts to display the recovery in the U.S. job market isn’t fast enough to prompt the Federal Reserve to cut financial stimulus.

The yield premium on 10-year U.S. Treasuries over similar- maturity Japanese administration bonds decline to the least in a month, sapping the relative edge of dollar-based assets. The yen hit a one-month high versus the euro as investors weighed the chances of new stimulus from the Bank of Japan (8301) at a two-day meeting starting tomorrow. Australia’s dollar  advances before the nation’s Reserve Bank declares a policy decision today.

“The U.S. economy isn’t strong enough to make a significant dent in the unemployment rate,” said Peter Dragicevich, a Sydney-based currency economist at Commonwealth Bank of Australia (CBA), the nation’s biggest lender. “Given that’s one of the key thresholds the Fed is looking for, we can’t see it pulling back from its stimulus.”

The dollar gave up 0.2 percent to 93.06 yen as of 11:48 a.m. in Tokyo after achieving 92.96, the worst since March 5. It relinquish 0.2 percent to $1.2868 per euro. The yen surged to 119.49 per euro, the best since Feb. 27, before trading little changed at 119.75.

Companies in the U.S. likely added 200,000 jobs last month after a boost of 198,000 in February, economists predicts in a Bloomberg News survey before ADP Research Institute releases the data tomorrow. Administration figures on April 5 are likely to display that the jobless ratio was 7.7 percent in March, unaltered from the prior month, according to another poll.

Fed Policy

The Fed repeated on March 20 that it will hold its standard rate of interest near zero as long as the unemployment rate will not move over 6.5 percent and inflation is projected to be no more than 2.5 percent.

The deficit in yields between 10-year Treasuries and Japan’s bonds dropped to 1.26 percentage points yesterday, its weakest since March 4.

The dollar has appreciated 2.1 percent in the past six months in a basket of the 10 developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes. The yen was the worst mover during the period with a 16 percent drop, while the euro hops ahead 1.7 percent.

BOJ Governor Haruhiko Kuroda declared today that the central bank will do whatever it can to erase deflation and that it will conduct bold financial easing. He spoke in parliament ahead of leading his first policy meeting since taking over from Masaaki Shirakawa last month.

“The dollar-yen rate has fallen partly in response to weak U.S. economic data,” said Yuki Sakasai, a foreign-exchange strategist at Barclays Plc in New York. “We can’t say that expectations for the BOJ are decreasing.”

Australian Dollar

Aussie dollar advanced versus most of its 16 major peers on assumption the Reserve Bank will abstain from indicating that reduction in interest rates be needed soon.

“The market is not as convinced as it was that the RBA’s going to ease further, as the economic data has stabilized,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington.

The so-called Aussie moved higher 0.3 percent to $1.0452. It touches $1.0497 last week, the strongest since Jan. 24.