By Candice Zachariahs and Kristine Aquino
January 06, 2012, 12:53 AM EST
Jan. 6 (Bloomberg) -- The euro fell to a 15-month low versus
the dollar on speculation declining consumer confidence and spending
will make it harder for European leaders to contain the region’s
sovereign-debt crisis.
The 17-nation currency was within 0.1 percent of
its weakest level in 11 years against the yen as Spain and Italy prepare
to sell debt next week after France’s borrowing costs rose at an
auction yesterday. The dollar is set for a weekly gain versus the yen
and euro before a U.S. report forecast to show employers added the most
jobs in three months in December. The Dollar Index reached a one-year
high.
“There’s not a huge amount of reasons to be
wanting to own the euro at the moment,” said Chris Weston, an
institutional trader at IG Markets in Melbourne. “The fundamentals point
to a weaker euro.”
Europe’s common currency fell to $1.2764, its
lowest level since September 2010, before trading at $1.2775 as of 2:20
p.m. in Tokyo, 0.1 percent below yesterday’s close in New York. The euro
was at 98.66 yen from 98.63 yesterday, when it touched 98.48 yen, its
weakest since December 2000. The dollar bought 77.23 yen from 77.12
yesterday and 76.91 on Dec. 30.
IntercontinentalExchange Inc.’s Dollar Index,
which tracks the greenback against the currencies of six major U.S.
trading partners, climbed as much as 0.2 percent to 81.062, the highest
since January 2011.
European Outlook
The euro has dropped 1.5 percent against the
dollar since Dec. 30, set for a fifth straight week of declines, the
longest stretch since February 2010.
European consumer confidence dropped to the
lowest in more than two years in December, economists predict the
Brussels- based European Commission will confirm today. An index of
household sentiment in the single-currency area fell to minus 21.2 from
minus 20.4 in November, according to the median estimate in a Bloomberg
News survey before the report. That’s the lowest since August 2009.
Retail sales in the region dropped 0.4 percent in
November following a 0.1 percent advance the previous month, a separate
survey shows before the European Union’s statistics office in
Luxembourg releases the data. Purchases decreased 0.9 percent from a
year earlier, according to the poll.
The euro slid yesterday after France sold 10-year
bonds at an average yield of 3.29 percent, compared with 3.18 percent
at a sale on Dec. 1. The bid-to-cover ratio, or the number of bids
received for each unit of debt sold, fell to 1.64 from 3.05. France’s
credit outlook was lowered by Fitch Ratings on Dec. 16.
Spain is scheduled to sell bonds maturing in 2015 and 2016 on Jan. 12. Italy will auction notes the following day.
Merkel, Sarkozy Meeting
German Chancellor Angela Merkel will meet French
President Nicolas Sarkozy on Jan. 9 in Berlin to talk about increasing
fiscal coordination among euro area states ahead of the European Union
leaders’ summit at the end of the month.
Japan’s Finance Minister Jun Azumi said he
understands that the weakening of the euro against the yen will have a
significant impact on companies that export their goods to the region.
He spoke to reporters in Tokyo today.
Japan sold the nation’s currency three times last
year as its continued strength threatened to derail an export-driven
economic recovery.
The dollar rose against the euro and yen this
week before data that may indicate the U.S. added jobs in December, a
further sign that the world’s largest economy is recovering.
Dollar Strength
“The news coming from the U.S. has been OK,” said
Derek Mumford, a Sydney-based director at Rochford Capital, a
currency-risk management firm. “I think we’re seeing just generally some
U.S. dollar strength, which is mainly reflected in the euro.”
Companies added 325,000 workers in December, the
most in records going back to 2001, according to a private report
yesterday from ADP Employer Services.
A government report today will probably show U.S.
nonfarm payrolls swelled by 155,000 positions last month, compared with
a gain of 120,000 in November, according to a Bloomberg survey. That
would be the biggest increase since September. The jobless rate probably
rose to 8.7 percent from 8.6 percent in the same period, a separate
poll shows.
The U.S. economy “is certainly still very
vulnerable to outside shocks,” Rochford’s Mumford said. “The troubles in
Europe won’t be settled in months. There’s no quick fix.”
The U.S. currency is also set to rise versus the
majority of its most-traded counterparts this week as Asian stocks
declined for a second day, boosting demand for safer assets.
The MSCI Asia Pacific Index slumped 1.4 percent after a 0.9 percent drop yesterday.
--With assistance from Toru Fujioka in Tokyo. Editors: Benjamin Purvis, Garfield Reynolds
To contact the reporters on this story: Candice Zachariahs in Sydney
at czachariahs2@bloomberg.net;
Kristine Aquino in Singapore at
kaquino1@bloomberg.net
To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net
