While you were sleeping: Greenback gains

While you were sleeping: Greenback gains

(BusinessDesk) January 7 - The U.S. dollar advanced on expectations tomorrow’s jobs report will confirm the optimism about the sustained economic recovery. Stocks on Wall Street fell as the Standard & Poor’s 500 Index’s recent gains pushed the valuation to the highest level in more than six months.

The Dow Jones industrial average and the S&P 500 index fell 0.37% in early afternoon trading. The S&P 500 index is trading for almost 16 times the operating profits of its companies, the highest since June, according to Bloomberg data.

"It leaves the market vulnerable to profit-taking if there's a negative reaction to the jobs data," Chris Burba, short-term market technician at Standard & Poor's in New York, told Reuters.

Energy shares compounded losses as oil prices dropped more than 2%. The S&P energy index fell 0.7%.

"We think demand for commodities should continue to improve, but in the short term there's a negative correlation between the [U.S.] dollar and commodities," Walter Todd, who helps manage about US$900 million as chief investment officer at Greenwood, South Carolina, told Reuters.

On a positive note, even as new jobless claims climbed more than expected for the week, the four-week average fell to its lowest in more than 2 years, showing the improvement in the U.S. jobs market remained on track.

Economists raised forecasts for government payrolls numbers due Friday. It is forecast to show U.S. job gains of 175,000 for December, according to a Reuters poll. Some analysts were forecasting employment gains of as much as 500,000.

Those expectations exacerbated the euro’s slide against the greenback, also hurt by concern about the European Union’s sovereign debt crisis.

In midday New York trading, the euro was 1% weaker at US$1.3017

The greenback was up 0.7% against a basket of six other major currencies.

"There's a strong consensus that there will be some good numbers coming out of the States tomorrow after that ADP report, and expectation of a huge payrolls number is fueling all sorts of dollar buying," C.J. Gavsie, managing director of FX sales at BMO Capital Markets in Toronto, told Reuters.

LinkedIn Corp, the largest networking site for online professionals, has hired banks to advise on an initial public offering this year, Bloomberg News reported, citing two people familiar with the IPO plans.

Morgan Stanley and JPMorgan Chase & Co of New York, Charlotte, North Carolina-based Bank of America Corp, and LinkedIn were aiming to complete an IPO prospectus by the end of the first quarter, according to Bloomberg.

(BusinessDesk)

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