The dollar rose the most against the euro since March and reached a two-month high versus the yen as traders bet the Federal Reserve will stop cutting interest rates and the U.S. lost fewer jobs in April than economists forecast.
The currency appreciated versus the Swiss franc, the Swedish krona and the South Korean won this week after the Fed cut the target lending rate by a quarter-percentage point on April 30 and said ``substantial'' easing since September would help foster economic growth. The euro weakened as confidence among European executives and consumers fell in April.
``The tide is beginning to turn for the dollar on two fronts,'' said Jim McCormick, head of global currency strategy at Lehman Brothers Holdings Inc. in an interview on Bloomberg Radio. ``One is that the Fed is becoming less dollar-unfriendly. The other is a clear signal that economies outside the U.S. are starting to slow.''
The dollar increased 1.3 percent to $1.5424 per euro this week, from $1.5630 on April 25. It touched $1.5361 Friday, the highest level since March 24. The dollar rose 0.9 percent to 105.40 yen, from 104.42 a week earlier. It touched 105.70 yen, the strongest since Feb. 28. The euro fell 0.5 percent this week to 162.53 yen, from 163.15. The dollar has risen 3.6 percent from a record low of $1.6019 versus the euro reached on April 22. This was the second consecutive week it advanced versus the euro, the first time it posted back-to-back weekly gains since December.

Futures traders are betting for the first time since December 2005 that the dollar will gain against the euro, figures from the Washington-based Commodity Futures Trading Commission show.
The dollar gained 0.4 percent against the euro after the Labor Department reported that U.S. payrolls shrank by 20,000 last month following a revised decline of 81,000 in March. The median forecast of 82 economists surveyed by Bloomberg News was for a drop of 75,000.
The Fed cut the target rate for overnight lending between banks by a quarter-percentage point to 2 percent this week, the seventh reduction since September. Futures on the Chicago Board of Trade showed yesterday an 86 percent chance policy makers will keep borrowing costs unchanged when they next meet June 25, compared with 80 percent odds on May 1. The balance of bets is for a decrease of a quarter-percentage point.
The European Central Bank will hold its main refinancing rate at a six-year high of 4 percent on May 8, all of the 53 economists surveyed. The Bank of England will keep its benchmark interest rate at 5 percent the same day, according to the median forecast of 61 economists in a separate survey.
An index measuring sentiment among executives and consumers in the countries that use the euro fell to 97.1 in April, from 99.6 in March, the 11th consecutive drop, the European Commission said in Brussels on April 30. A separate report showed consumer inflation slowed last month.
``We got good U.S. news and bad European news,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``We have two forces moving hand in hand to help the dollar.''

U.S. stock indexes closed third week higher after a better-than-forecast jobs report and the $23 billion takeover of Wm. Wrigley Jr. Co. pushed the market to its longest streak of gains in seven months.The S&P 500 rose 1.2% this week. The measure has gained 6.1% in the past three weeks, paring its 2008 decline to 3.7%. The Dow Jones Industrial Average added 1.3%.

Technology, consumer and telephone stocks led the Standard & Poor's 500 Index to a four-month high, while raw material and energy producers declined as the dollar climbed. Wrigley had the steepest gain in more than two decades after Mars Inc., with financing by billionaire Warren Buffett, agreed to buy the world's biggest maker of chewing gum.

Sure, there was the news Monday that Mars is going to buy Wrigley (WWY) for approximately $23 billion and the news Tuesday that Mastercard (MA) had a blowout quarterly earnings report, but that, and other items like the FDA shooting down a new cholesterol drug from Merck (MRK), led to a James Bond-like trade in that the indices were shaken, but not stirred.

The stirring action was reserved for the latter part of the week, which brought the Q1 GDP report, the FOMC meeting and the April employment data. In addition, it also brought some noteworthy movement in the dollar and some volatile activity in the commodity arena.

The Fed appears to be feeling better about the economy's prospects, too. After cutting the fed funds rate Wednesday another 25 basis points to 2.00%, it issued a directive that was different in tone from prior directives. In particular, the directive omitted a prior reference to the idea that "downside risks to growth remain." Verizon Communications Inc., the second-largest U.S. phone company, said first-quarter profit jumped 9.8 percent as mobile- phone customers spent more on text messages and wireless Internet browsing. Verizon shares rose 6.9 percent to $39.59 this week.

Walt Disney Co., Cisco Systems Inc., Clear Channel Communications Inc. and Sara Lee Corp. are among S&P 500 companies slated to report quarterly results next week.

Oil prices fell last week as the dollar rose to a five-week high against the euro after the smaller-than-expected job loss last month, which may indicate the labor market is weathering the economic slowdown. When the dollar rises, commodities often fall because they lose appeal as a hedge against inflation. Oil touched a record $119.93 a barrel on April 28, as the dollar dropped.

Crude oil rose more than $3 a barrel Friday after a report showed that the U.S. lost fewer jobs than forecast in April and as Turkey renewed its military offensive against Kurdish rebels in Iraq. Iraq's northern region is controlled by a semi-autonomous Kurdish administration. Kirkuk, at the center of the region's biggest oil field, is about 100 miles (161 kilometers) from the Turkish border.

The Organization of Petroleum Exporting Countries won't consider increasing crude-oil production before it meets in September because the market is well supplied, Qatari Oil Minister Abdullah al-Attiyah said Friday. The 13-member group is responsible for more than 40% of the world's oil output.

Crude oil for June delivery declined to $116.32 a barrel. Futures, which have climbed 83% from a year ago, are down 1.9% last week. Brent crude oil for June settlement weakened to $114.56 a barrel.
Precious metals retreated too with gold closed the week 3.2% down at $858 an ounce. The metal fell the third straight week. Gold hadn't fallen for three weeks in a row since May 25, 2007. In another precious-metal market, silver futures declined to $16.465 an ounce, 2.9% for the week, the second straight weekly drop. Platinum slipped to $1,908.20 (-3% for the week).
In base metals, the copper conundrum continued, with the red metal torn between weak Chinese buying interest because of high prices and supply disruptions in Chile where strikes are affecting Codelco, the world’s largest producer. Copper fell 1.8% to $8415 a tonne last week. Codelco, the world’s largest producer, is reported to have asked some US customers to consider delaying orders if strikes in Chile continue.