Dec. 3 (Bloomberg) -- The dollar headed for its first weekly gain in more than two months against the yen after Japanese officials suggested they may stem the currency's slide and on expectations U.S. employers hired 200,000 workers last month.
The U.S. currency also halted a seven-week slide against the euro on speculation the dollar's decline has been excessive. Japanese Finance Minister Sadakazu Tanigaki said today Japan will act to stem the yen's climb ``if necessary.'' The dollar yesterday fell to the fifth record in a week against the euro and its lowest versus the yen in almost five years.
``Japan is as interested in playing the intervention fear as much as intervening, and the constant fear that they're going to act is already doing the job,'' said Kristjan Kasikov, a currency strategist in London at Calyon, the securities unit of Credit Agricole SA. ``Investors are becoming more nervous'' about the pace of the dollar's decline.
Against the yen, the dollar traded at 103.41 at 10:24 a.m. in London, from 103.24 late in New York yesterday, when it reached 101.83, the weakest since January 2000, according to electronic currency-dealing system EBS. It was also at $1.3278 per euro, from $1.3268, after yesterday reaching a record $1.3385.
The U.S. currency is up 0.8 percent against the yen for the week, the first such advance in 10. The dollar is also 0.1 percent higher versus the euro from a week ago. Kasikov said the dollar may end the day at $1.33 per euro and 103 yen.
``The combination of the payrolls report and a sense that positions have gotten over-extended has led to the pullback in the dollar,'' said David Mozina, a currency strategist in Sydney at ABN Amro Holding NV. ``We're closer to the point where Japan takes action'' to sell its currency, he added. The dollar may rise to $1.32 per euro and 103.50 yen today, Mozina said.
`Lose Some Steam'
Labor Department figures may show U.S. employers hired more than a million workers in the past six months, according to the median forecast in a Bloomberg survey. A sale of payrolls derivatives by Deutsche Bank AG and Goldman Sachs Group Inc. indicated the U.S. added 223,000 jobs in November. The report is scheduled for release at 8:30 a.m. in Washington.
``Recent moves in foreign-exchange rates are very rapid and may not reflect fundamentals'' of economies, Tanigaki said at a press conference today in Tokyo. ``We're ready to take appropriate action in a timely manner.''
Japan sold a record 32.9 trillion yen ($320 billion) in the fiscal year ended March 31 to stem its increase and hasn't sold since, according to Ministry of Finance data. The ministry directs the central bank to buy or sell yen.
``We're certainly getting to the point where Japan will likely come in,'' said Masahiro Fukuhara, a currency strategist in Tokyo at Barclays Global Investors, which manages more than $1 trillion in assets. ``The yen's rise may lose some steam.''
`Back on the Slide'
Any gains in the dollar on speculation of faster U.S. job growth may be temporary, said Simon Derrick, head of currency strategy at the Bank of New York in London. The U.S. currency is likely to fall because policy makers won't coordinate to halt its decline, Derrick said. Bank of New York expects the dollar to fall to 100 yen and to $1.35 per euro by year-end.
``Once we get the short-term effect of the payrolls out of the way, we'll be back on the slide for the dollar,'' Derrick said. ``I don't think that the U.S. are going to do anything about the dollar, because it's not in their interest,'' he said. ``Without U.S. support, joint intervention by Europe and Japan could only slow the dollar at best.''
Forecast Cut
Morgan Stanley today reduced its forecasts for the dollar, saying U.S. officials have adopted a ``weak dollar preference.'' The firm predicts the U.S. currency to fall to $1.37 per euro and to 95 yen by the end of June. Its previous forecasts were $1.20 and 115 yen respectively.
Overseas investors may tire of financing the U.S. deficit, Greenspan said at the European Banking Congress in Frankfurt on Nov. 19. ``A diminished appetite for adding to dollar balances must occur at some point,'' he said. The gap in the current account, a measure of trade, was a record $166.2 billion in the second quarter.
Concern Japan may sell its currency won't stop the dollar from falling further against the yen, said Toru Umemoto, a market analyst in Tokyo at Keio University's Global Security Research Center, which is headed by Eisuke Sakakibara. Sakakibara formerly managed currency policy at Japan's finance ministry.
``Fears of Bank of Japan action may delay the dollar's fall, but the trend remains unchanged,'' said Umemoto, predicting the dollar may fall to 100 yen within two weeks. ``There's nothing that says Japan has to intervene at this level,'' he also said.
