DOLLAR PICKS UP HAVEN SUPPORT by Ed Hammond and Neil Dennis

Published: July 2 2009 Financial Times website

The dollar and yen gained steadily on Thursday as risk aversion pushed investors towards “haven” currencies following the release of US jobs data.

Wednesday’s risk appetite receded as investors became cautious ahead of June’s non-farm payrolls report, released a day earlier than usual due to the Independence Day holiday in the US.

The data showed a worse-than-expected loss of 467,000 jobs in the period, damaging hopes for a swift economic rebound.

“The FX markets’ immediate and appropriate response is to sell risk,” said Alan Ruskin at RBS Greenwich Capital.

“The dollar appears to be taking its lead from weaker risk appetite rather than softer rates.”

Fund flows data earlier this week showed US investors were increasingly keen to diversify into foreign assets, which has undermined the dollar in recent weeks. But they have remained cautious, pulling back into the safety of their domestic currency at any sign of a reversal of recovery hopes.

Against the euro, the dollar rose 0.9 per cent to $1.4009, and climbed 0.5 per cent versus the pound to $1.6403.