Franc, Yen Rise as Economists Say U.S. job Growth Slowed, Stocks Decline

The Swiss franc and the yen strengthened before a report that economists said will show U.S. job growth slowed last month and as a slide in stocks boosted demand for the relative safety of the two currencies.

The franc extended its biggest weekly gain versus the euro since the shared currency’s introduction in 1999 ahead of a German report next week forecast to show factory orders fell in July. The yen appreciated versus 15 of its 16 major counterparts after the New York Times said the U.S. may sue companies including Bank of America Corp. for misrepresenting the quality of securities backed by home loans.


The franc advanced 1.7 percent to 1.11547 per euro at 9:50 a.m. in London after rising to 1.11210, the strongest since Aug. 15, taking its gain this week to a euro-era record of 4.8 percent. The Swiss currency gained 1.6 percent to 78.29 centimes per dollar. The yen climbed 0.3 percent to 109.42 per euro, after appreciating to 109.13, the strongest since Aug. 19.

The euro fell 0.1 percent to $1.4246, a fourth day of declines that extended its loss this week to 1.8 percent.

Franc’s Surge

The franc has surged more than 16 percent against the euro over the past year as the euro-area’s worsening debt crisis and signs of slowing economic growth in the region boosted demand for the currency as a hedge against financial losses.

The Swiss government this week pledged 870 million francs ($1.1 billion) as part of an economic stimulus package to help counter the impact of franc strength. The central bank also lowered borrowing costs to zero last month and boosted liquidity to the money market to protect exports.

Stock Losses

The MSCI Asia Pacific Index of shares retreated 1.1 percent, snapping a six-day gain. Europe’s Stoxx 600 Index fell for the first time in five days, losing 1.9 percent. Futures on the Standard & Poor’s 500 Index slipped 0.8 percent.

U.S. payrolls rose by 68,000 in August, down from a 117,000 increase in July, according to economist estimates before today’s Labor Department report. The unemployment rate probably held at 9.1 percent, marking 26 out of the last 28 months where it has been at or above 9 percent.

The franc and yen tend to strengthen during periods of financial turmoil because their export-reliant economies don’t need foreign capital to balance current accounts -- the broadest measure of trade.

According to a Bloomberg News survey, factory orders in Germany, Europe’s biggest economy, decreased 1 percent in July from the prior month, the first drop since March. The Economy Ministry will report the data on Sept. 6.

The euro has lost 1.2 percent over the past 12 months against a basket of its nine major peers tracked by Bloomberg Correlation-Weighted Currency Indexes. The dollar has weakened 12 percent, the worst performer ranked by the gauge. The franc has risen 17 percent. (Bloomberg)