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Dollar gets jobs-data lift as euro sags

Dollar gets jobs-data lift as euro sagsNEW YORK: The dollar was up on Wednesday, rising with global stock markets and getting lift from private-sector jobs data bolstering bets a hike in US interest rates will come in 2015, while the euro fell back on a report euro zone inflation had turned negative.

US private employers added 200,000 jobs in September, beating forecasts and hinting jobs growth may be sufficient for the Federal Reserve to raise interest rates later this year, according to the ADP National Employment Report.

The news lifted the dollar index, a basket of major currencies traded against the dollar.

The index was last up 0.45 percent for the day and on track for a 0.7 percent gain for the three months ending Wednesday.

As Wall Street posted gains topping 1 percent and US Treasury yields rose, the dollar was up 0.30 percent against the yen to just over 120 yen, firmer against the Swiss franc , and flat against British sterling.

The euro fell against the dollar by 0.6 percent to $ 1.1180 , and was down 0.6 percent against the British pound after a euro zone inflation report.

Euro zone prices fell by 0.1 percent on an annual basis in September after rising 0.1 percent last month, missing expectations and remaining well below the European Central Bank’s target of just under 2 percent.

The report fed speculation the ECB will expand or extend its cheap-money asset purchases as America readies to raise interest rates.

While the ECB is focused on inflation expectations and inclined to look through falls in the headline rate, traders say a sustained drop below zero could reinforce policymakers’ fears about the firmer euro’s impact on financial conditions.

“A weak number was expected and bolsters expectations that the ECB may have to expand its asset purchase program from the 60-billion-euros-a-month to something larger, perhaps by year-end,” said Richard Falkenhall, currency strategist at SEB.

The common currency has eked out gains against the dollar this quarter, mainly because investors have unwound euro-funded carry trades in riskier assets and emerging currencies.

That has seen the euro move inversely to global stocks, which are on track for their worst quarter in four years.

Traders said US nonfarm payroll numbers due on Friday could strengthen or weaken the case for a 2015 lift-off in US interest rates and set the tone for the dollar.

The market will also be keeping an eye on Fed Chair Janet Yellen, who is due to speak at a conference at 1900 GMT on Wednesday.

Copyright Reuters, 2015

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