Bloomberg
The euro headed for a fifth weekly loss against the dollar as a European report showed confidence in the economic outlook fell to a two-year low, making it harder for the region’s leaders to contain the debt crisis.
The 17-nation currency was about 0.1 percent from the weakest in 11 years versus the yen as Spain and Italy prepare to sell debt next week after France’s borrowing costs rose at an auction yesterday. The dollar headed for weekly gains versus the yen before a U.S. report forecast to show employers added the most jobs in three months in December. Hungary’s forint strengthened for a second day against the euro.
“There’s still negative sentiment surrounding the euro, and it’s likely to weaken further,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “Today’s data will likely confirm declining business and consumer confidence. The market has almost fully priced in a recession in Europe. The question is how deep and how prolonged that will be.”
The euro was little changed at $1.2802 at 10:04 a.m. in London having fallen 1.2 percent this week, the longest stretch of declines since February 2010. It earlier fell to $1.2764, the lowest since September 2010. The single currency gained 0.1 percent to 98.73 yen after falling to 98.48 yen yesterday, the weakest since December 2000. The dollar was unchanged at 77.12 yen, having risen 0.3 percent this week.
‘Weaker Euro’
An index of executive and consumer sentiment in the euro area declined to 93.3 in December from a revised 93.8 in the previous month, the European Commission said today. The unemployment rateheld at 10.3 percent in November, a separate report showed.
“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 Ltd. in Melbourne. “The fundamentals point to a weaker euro.”
The euro fell 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 byFitch Ratings on Dec. 16.
Spain is scheduled to sell bonds maturing in 2015 and 2016 on Jan. 12. Italy will auction debt the following day.
Merkel, Sarkozy
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 before the European Union leaders’ summit at the end of the month.
Japanese Finance Minister Jun Azumi told reporters in Tokyo today he understands the weakening of the euro against the yen will have a significant impact on companies that export their goods to the region. Japan sold the yen three times last year as its strength threatened to derail an export-led recovery.
The dollar rose against the euro and yen this week before a report forecast to show the U.S. added jobs in December, adding to signs the world’s largest economy is recovering.
“The news coming from the U.S. has been OK,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency-risk management company. “We’re seeing just generally some U.S. dollar strength, which is mainly reflected in the euro.”
U.S. Jobs
U.S. employers hired 155,000 workers last month, compared with a gain of 120,000 in November, according to a Bloomberg survey before today’s Labor Department report. That would be the most since September. The jobless rate (USURTOT) rose to 8.7 percent from 8.6 percent in the same period, a separate survey showed. U.S. companies added 325,000 workers in December, the most in records going back to 2001, ADP Employer Services said yesterday.
IntercontinentalExchange Inc.’s Dollar Index (DXY), which tracks the greenback against the currencies of six major U.S. trading partners, was little changed today to 80.835 after rising to 81.062, the highest since Jan. 11, 2011.
The forint pared its weekly decline as Hungary’s Prime Minister Viktor Orban met central bank President Andras Simor amid a dispute about the bank’s independence that threatens the country’s bailout.
Orban met with Simor and Economy Minister Gyorgy Matolcsy, the premier told reporters in Budapest today. Hungary needs a “quick” deal on aid with the International Monetary Fund and the European Union and is ready to discuss the conditions, Tamas Fellegi, the minister assigned to lead the aid talks, told reporters yesterday.
“Early forint action shows that markets are happy with this” meeting, Simon Quijano-Evans, an economist at ING Groep NV (INGA) in London, wrote in a research report today. “It would be great to say that after 18 months of noise, we are seeing light at the end of the tunnel. All the more so since Orban and Simor are apparently meeting now.”
Hungary’s currency gained 0.6 percent to 317 per euro, trimming this week’s decline to 0.6 percent.
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
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