Euro Has Biggest Weekly Gain of Year on Signs of Faster Growth

The euro had its biggest weekly advance in more than eight months against the dollar as evidence mounted that Europe's economy is accelerating.

Germany yesterday reported industrial production rose the most in five months in June. Signs of faster growth prompted Goldman Sachs Group Inc. this week to abandon its forecast for the European Central Bank to lower interest rates, a reduction that would have widened the gap with the U.S. The euro is up more than 4 percent from its 14-month low on July 5.

The euro gained 2 percent this week to $1.2358, according to electronic currency-dealing system EBS. It was the largest weekly gain for the 12-nation currency since the period ended Nov. 26. The yen rose 0.5 percent to 111.95 per dollar.

The dollar pared some of its weekly loss against the euro after a U.S. government report yesterday showed the economy added more jobs than forecast, boosting speculation the Federal Reserve will keep raising interest rates.

Europe's common currency two days ago rose to $1.24 for the first time since May after a government report showed factory orders in Germany, Europe's biggest economy, unexpectedly increased. The euro has rallied for five weeks as reports showed business confidence increased in France, Germany and Italy.

The dollar rose for the first day this week yesterday after the U.S. Labor Department said employers added 207,000 workers to their payrolls in July, compared with a revised 166,000 a month earlier. Economists expected 180,000 new jobs, based on the median of 73 estimates in a Bloomberg News survey.