May 20 (Bloomberg) -- The dollar rose in London on expectation a government report will show the number of Americans filing initial applications for jobless benefits fell last week, adding to evidence of stronger job growth.

The U.S. currency has gained versus 15 of the 16 most traded currencies in the past three months on speculation the Federal Reserve will raise its benchmark interest rate from a 45-year low of 1 percent in June. Fed Chairman Alan Greenspan and Governor Ben Bernanke may also signal the central bank is getting closer to raising interest rates.

``A June move is still highly dependent on what we see on jobs,'' said Tim Fox, head of currency strategy in London at National Australia Bank Ltd., tied as the most accurate forecaster for the dollar versus the yen in a quarterly Bloomberg survey. ``The obvious trade today is to buy the dollar.''

Against the euro, the dollar climbed to $1.1927 at 8:30 a.m. in London from $1.2008 late in New York yesterday, according to EBS, an electronic foreign-exchange dealing system. The U.S. currency also rose for the first day in three against the yen, to 113.56 yen from 113.13.

First-time claims fell to 325,000 from 331,000 the week before, the Labor Department will probably say, based on the median of 39 forecasts in a Bloomberg News survey. The dollar rallied around 1 percent against both the euro and yen two weeks ago, when claims fell to 315,000, the lowest since October 2000.

``Today's data may help confirm speculation the Fed will raise rates in June, supporting the dollar,'' said Koji Fukaya, chief analyst in Tokyo of the foreign exchange and treasury division at Bank of Tokyo-Mitsubishi Ltd., a unit of Japan's second-biggest lender.

Fed Speakers

Greenspan and Bernanke may add to comments from other Fed officials this week backing expectations of higher U.S. rates, which may boost foreign capital inflows and demand for U.S. currency. Gary Stern, president of the Federal Reserve Bank of Minneapolis, said yesterday ``there is a widely anticipated move in interest rates coming, and I think that is appropriate.''

Stern is a non-voting member of the Fed's rate-setting committee this year.

The dollar's advance versus the euro accelerated when it reached $1.1980 and $1.1940, levels where some investors had placed pre-set orders to buy dollars and sell euros, said traders including Keizo Tanaka, trading manager at Resona Bank Ltd. in Tokyo. Traders typically place pre-set orders to limit losses in the event their bets go the wrong way.

A separate report may show U.S. manufacturing activity in the Philadelphia region expanded this month. The Federal Reserve Bank of Philadelphia's regional index may register 31.0 from 32.5 in April, according to the median forecast in a Bloomberg survey. A reading above zero indicates increasing activity.

`On the Verge'

``The Fed is on the verge of tightening monetary policy, it's not just about employment, I think inflation has turned around,'' said Ian Gunner, head of foreign-exchange research in London at Mellon Financial Corp. ``The prices-received category of the Philly Fed may show how prices are getting passed along the production chain.'' Mellon manages about $612 billion.

Against the euro, the dollar will gain to $1.18 within a week and $1.16, the strongest since November, in three months, Gunner predicted.

The dollar also gained versus the yen after the Nikkei 225 Stock Average dropped as much as 1.9 percent, the first loss in three days. The Nikkei 225 yesterday completed its biggest two- day rally since July after a government report on Tuesday showed the economy grew at a 5.6 percent pace in the first quarter.

The Nikkei had risen as much as 0.7 percent, sending the yen stronger, amid optimism growth will renew interest in Japanese shares from overseas investors.

Japanese Stocks

``Any move in the stock market is deciding the direction of the yen,'' said Kosuke Hanao, head of foreign exchange in Tokyo at Royal Bank of Scotland, the U.K.'s second-largest bank. ``The market's focused on how the Nikkei moves.''

Japan's improving economic growth won't prompt Fitch Ratings to raise its negative outlook on Japan's sovereign debt rating, said Brian Coulton, head of sovereign rating for Asia at Fitch, said in Tokyo.

``Until we're confident in sustained growth in nominal GDP'' there will be no upgrade, Coulton said. Fitch currently has a AA- credit rating on Japan, its fourth-highest. It was cut one notch in November 2002.

Japan's central bank kept monetary policy unchanged as eight quarters of economic growth have failed to stamp out deflation in the world's second-largest economy. The Bank of Japan also left its evaluation of the world's second-largest economy unchanged in its monthly economic assessment.

To contact the reporters on this story: Taizo Hirose in Tokyo at hirose2@bloomberg.net

Last Updated: May 20, 2004 03:31 EDT