The dollar and yen fell against most major counterparts last week as U.S. private employers added more jobs than forecast in August, easing concern the recovery in the world’s biggest economy is slowing and fueling risk appetite.
The yen and dollar were lower against most major counterparts even after the Institute for Supply Management’s index of U.S. non-manufacturing businesses, which covers about 90% of the economy, fell to 51.5 in August from 54.3 the prior month. A decline to 53.2 was forecast.
The greenback fell even after the gain in existing-home sales signaled the U.S. housing market may be starting to stabilize.
The index of pending home resales rose 5.2% after a revised 2.8% drop the prior month, figures from the National Association of Realtors showed. A 1% decline was projected for July, according to the median forecast of economists.
The major focus was on Aug 10 FOMC minutes that recognize the US economic pace slowed & has downside risks, and show several members discussed addl stimulus.
All but Hoenig approved reinvesting rolloffs in Tsys. A few thought the econ effects of reinvesting "likely would be quite small"; most judged it would be better to reinvest in longer term Tsys. Growth expected to pick up in 2011.

The euro touched a two-week high versus the greenback as overall U.S. employment declined by about half of the amount forecast in a survey.
Europe’s shared currency rose for a fourth day against the dollar, the longest winning streak in five weeks, as Labor Department figures showed payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated. The median estimate of economists was a gain of 40,000 private positions. Overall payrolls shed 54,000 jobs, compared with a forecast for a drop of 105,000.
The euro rose earlier against the yen after European retail sales gained for a third month in July.
The euro area’s economy will probably expand between 1.4% and 1.8% this year, the European Central Bank said Thursday. That’s up from a previously forecast range of between 0.7% and 1.3%.

The Canadian dollar was the top performer among the most-traded currencies as investors sought assets linked to growth.

The Aussie advanced to a three-week high against the greenback as Australia’s economy expanded last quarter at the fastest pace in three years.

Japanese stocks rose for a third day, driving benchmark indexes to their first weekly gain in a month, after U.S. reports showed an unexpected increase in pending home sales and improved retail sales.

“Investors are kind of relieved because a downward spiral in the global economy had a pause this week,” said Naoki Fujiwara at Shinkin Asset Management Co. “But investors won’t jump into buying shares just because of that, since there is still a strong sense of uncertainty.”
The Nikkei, which sank to its lowest level in 16 months in intraday trading two days ago, increased 1.4% last week, and the Topix gained 0.5%.
The Topix has fallen 18% from its high this year on April 15 on concern Europe’s debt crisis and China’s steps to curb property prices will slow global economic growth. Stocks in the index trade at 14.7 times estimated earnings on average, near the lowest level since April 2009.

European stocks posted the biggest weekly gain since July as reports from the U.S. and China reassured investors that the economic recovery is not faltering and takeover speculation increased.
Rio Tinto Group and Xstrata Plc led an advance in basic- resource shares as manufacturing in China grew at a faster pace in August.
Daimler AG rose 8.5% as Mercedes-Benz sales advanced in August.
Yell Group Plc soared 13% as investors speculated that one or more companies are preparing a takeover bid for the company.
The Stoxx Europe 600 Index climbed 3.7% last week

“We’ve had very encouraging economic data this week,” said Matthias Jasper at WGZ Bank AG. “People have been too negative and we’re going to see higher prices on equity markets in the coming weeks.”
National benchmark indexes climbed in all but one of the 18 western European markets. France’s CAC 40 Index advanced 4.7%,
while Germany’s DAX Index rose 3.1% and the U.K.’s FTSE 100 Index soared 5.3%.All industry groups in the Stoxx 600 rose last week.
European basic-resource shares rose 6.8% for the week, the best performance among 19 industry groups in the Stoxx Europe 600 Index.
Continental AG jumped 8.8%, the shares’ biggest weekly advance since June. Europe’s second-largest auto parts supplier, raised 1 billion euros ($1.3 billion) in the region’s first junk bond, or high-yield note, sale in a month.
A measure of European automobile and automobile part shares climbed 6.4% in the week, the second-best performance among 19 industry groups in the Stoxx 600 Index.

U.S. stocks rose, with the Standard & Poor’s 500 Index gaining a fourth day, as better-than- estimated growth in private payrolls eased concern the economy is sliding back into a recession.

JPMorgan Chase & Co., the second-biggest U.S. bank, gained 2.3% and Caterpillar Inc. advanced 2.6% as private employers climbed 67,000 last month.
Monster Worldwide Inc., the online-recruiting company, increased 7.4%.
H&R Block Inc. surged 7.3% after posting a narrower quarterly loss as the company seeks to win back from online rivals such as Intuit Inc.’s TurboTax.
Financial stocks were the biggest gainers among 10 industries in the S&P 500.
The S&P 500 rose 3.6% last week (its longest winning streak since July).
Index jumped after a report showed private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated. The median estimate of economists surveyed by Bloomberg News called for a gain of 40,000. Overall employment fell 54,000 for a second month and the unemployment rate rose to 9.6% as more people entered the labor force.
“In order for the economy to be self sustaining you have to put people back to work,” said Michael Mullaney at Fiduciary Trust Co.. “People had been really fearing that there was going to be a chance of a double dip and that seems to be abating right now. Last week or so you’re starting to get some positive surprises on the economic data so that lends support to the market.”