By - Jan 14, 2011 11:06 PM GMT+0800
The dollar fell for a third straight day against the yen as reports showed consumer confidenceunexpectedly dropped and U.S. retail sales rose less than economists forecast.
The euro was headed for its biggest weekly gain in almost two years versus the dollar on speculation European finance ministers may reinforce measures to stem the region’s sovereign- debt crisis. The Australian dollar dropped versus the greenback after China said it will raise the reserve requirement ratio for banks and as flooding sapped the outlook for the South Pacific nation’s economic growth.
“The market is looking at the weaker-than-expected number,” said Greg Anderson, a currency strategist at Citigroup Inc. in New York. “The dollar moved on that.”
The dollar dropped 0.2 percent to 82.63 yen at 10:03 a.m. in New York, from 82.81 yesterday, after earlier rising 0.2 percent. The U.S. currency traded at $1.3372 per euro, compared with $1.3364. The euro fell 0.1 percent to 110.54 yen.
The euro has gained 3.5 percent against the dollar this week, its biggest five-day gain since May 22, 2009.
The Thomson Reuters/University of Michigan preliminary index of consumer confidence dropped to 72.7 this month from 74.5 in December. The median forecast of 72 economists in a Bloomberg News survey was for an increase to 75.5.
Sales at U.S. retailers gained 0.6 percent in December after advancing 0.8 percent in the previous month, the Commerce Department reported. The median forecast of 83 economists in a Bloomberg News survey was for a 0.8 percent gain.
Euro’s Gain
The euro has advanced from a four-month low of $1.2867 reached Jan. 10, rising as GermanChancellor Angela Merkel indicated this week the government’s desire to do “whatever is needed to support the euro.”
The 17-nation currency was supported as European Central Bank President Jean-Claude Trichetsignaled yesterday he’s prepared to raise interest rates and council member Axel Weber said today inflation risks could increase.
European inflation quickened to an annual pace of 2.2 percent in December from 1.9 percent in the previous month, the European Union’s statistics office said today. That’s the fastest since October 2008 and in line with a Jan. 4 estimate.
“There are many that are a bit shell-shocked by the developments in the euro,” said Paresh Upadhyaya, head of Americas G-10 currency strategy at Bank of America Corp. in New York. “There was an exaggerated reaction to Trichet’s comments. I don’t think that’s sustainable.”
Outlook for Euro
The euro may weaken to $1.18 by June as the European debt crisis weighs on sentiment, according to Marc Chandler, chief currency strategist at Brown Brothers Harriman & Co.
“We can go back to where we were in the spring of 2010, when the Greece crisis reached a mini-climax and the euro was down at its birth rate, which is sort of the high teens, $1.18- $1.19,” Chandler said in an interview in London this week. “We can see that this year, perhaps in the first half.”
South Africa’s rand declined 1.4 percent to 6.9395 versus the greenback. The Australian dollar lost 0.9 percent to 98.84 U.S. cents, from 99.76.
To contact the reporters on this story: Catarina Saraiva in New York atasaraiva5@bloomberg.net; Allison Bennett in New York at abennett23@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
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