NEW YORK (Bloomberg) — The dollar rose to a one-month high against the yen after a US government report showed that November job growth exceeded forecasts, reducing concern the world's largest economy will head into a recession.

The US currency posted a second weekly gain versus the yen as traders pared bets the Federal Reserve will cut borrowing costs by a half-percentage point on Tuesday.

The British pound and the Canadian currency fell against the dollar and euro this week after central banks in the UK and Canada reduced interest rates. The European Central Bank kept its rate unchanged.

"The US economy is slowing down, but not heading into a recession," said Paresh Upadhyaya, who helps manage $29 billion in currency assets at Putnam Investments in Boston.

"The report doesn't justify an aggressive rate cut from the Fed. Investors are feeling more comfortable selling the yen" against the dollar in this environment.

The dollar advanced this week to 111.68 yen, from 111.24 on November 30. It reached 111.79 on Friday, the strongest since November 9.

The Japanese currency fell to 163.73 against the euro, from 162.82, over the same period. The euro gained to $1.4658, from $1.4633. The pound declined to $2.0304, from $2.0563.

The yen's decline accelerated last Thursday when U.S. President George W. Bush announced a plan to freeze interest rates on some subprime mortgages.

Investors returned to the carry trade as concern eased that credit-market losses will drag down economic growth.

Brazil's real was the best performer compared with the 16 most-actively traded currencies this week, rising 2.5 percent against the yen. New Zealand's dollar rose 1.9 percent and South Africa's rand gained 1.8 percent.

In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the difference between the two.

The Bank of Japan's benchmark rate is 0.5 percent, the lowest among industrialised nations, compared with 11.25 percent in Brazil, 8.25 percent in New Zealand and 11 percent in South Africa.

The central bank in South Africa boosted its benchmark interest rate a half-percentage point on December 6.

Borrowing costs in New Zealand and Brazil were unchanged on December 5.

The British pound fell against all 16 major currencies this week after the Bank of England cut its borrowing costs to 5.5 percent on December 6 from 5.75 percent.

Canada's dollar declined 0.6 percent against the US currency this week after the Bank of Canada reduced its key interest rate to 4.25 percent on December 4 from 4.5 percent.

It pared some of the weekly loss after a government report showed the nation's employers added five times more jobs in November than economists forecast.

The euro strengthened against the pound after the ECB kept borrowing costs at four percent on December 6. ECB policy makers signaled they were concerned about inflation.

With the market expecting the Fed to continue to cut interest rates while the ECB may be on hold, the dollar may fall to $1.50 per euro by the end of the month, said Richard Franulovich, a senior currency strategist at Westpac Banking in New York.

"In the short term, the euro still has some room to gain against the dollar," Franulovich said.

"But euro zone growth will weaken and the ECB will react. The euro is going to be in trouble in the second half of next year," and the dollar will rebound to between $1.31 and $1.35 in that period.

The US currency will rise to $1.40 per euro by the end of 2008, according to the median forecast of 42 economists in a Bloomberg survey.

US employers added 94,000 jobs last month, compared with a revised 170,000 in October, the Labor Department said in Washington.

The total compared with the median forecast of 80,000 in a Bloomberg News survey of 82 economists.