The dollar dropped against the New Zealand dollar and Brazilian real as global stocks rallied on the outlook for U.S. retail sales, reducing safety demand for the world’s main reserve currency. The euro rose to a six-week high against the dollar as concern eased that the sovereign-debt crisis will get worse after the European Union released details of its stress tests on banks. The Canadian and Australian dollars advanced versus the greenback as evidence the world’s largest economy is recovering from the recession boosted commodities. “The dollar is trading with risk sentiment,” said John Doyle, a strategist in Washington at Tempus Consulting Inc., a currency trading firm. “Stocks are gaining. Many believe it’s a good buying opportunity.” The dollar slid 1.4 percent to 70.34 U.S. cents versus the New Zealand currency at 4:16 p.m. in New York, from 69.39 yesterday. The U.S. currency depreciated 0.8 percent to 1.7647 Brazilian reais, from 1.7796. The Standard & Poor’s 500 Index gained 3.1 percent after falling 5 percent last week. Crude oil for August delivery increased 3.4 percent to $74.42 a barrel after dropping yesterday to its lowest since June 8. The yield on the 10-year Treasury note increased 0.06 percentage point to 2.99 percent. Australia’s dollar gained 1.4 percent to 86.48 U.S. cents, from 85.27 cents yesterday. The Canadian currency appreciated 0.6 percent to C$1.0478 per U.S. dollar, from C$1.0545. Dollar Flows Investors have been pulling out of U.S. dollar positions, according to Bank of New York Mellon Corp.’s iFlow data. Cumulative outflows from the dollar totaled two times the average amount compared with the previous year. U.S. retailers’ sales probably expanded at an average monthly rate of 4 percent in the first five months of the fiscal year that began Jan. 31, the biggest gain since 2006, the International Council of Shopping Centers, a trade group, said before its June report tomorrow. Nordstrom Inc. and Kohl’s Corp. are among chains that will report June sales increases at stores open at least a year, according to analysts’ estimates. The euro advanced 0.2 percent to $1.2649, from $1.2626 yesterday, and touched $1.2665, the highest since May 21. The yen depreciated 0.2 percent to 87.70 per dollar, from 87.52, after touching 86.97 on July 1, the strongest level since Dec. 2. The euro gained 0.4 percent to 110.93 yen. European Union regulators said they are carrying out stress tests on 91 banks, accounting for 65 percent of the region’s banking industry, to examine whether they can withstand a shrinking economy and a drop in government bond values. Stress Tests The lenders being tested include 27 Spanish, 14 German and 6 Greek banks, the Committee of European Banking Supervisors said in an e-mailed statement. EU banking regulators have told lenders that their planned stress tests may assume a loss of about 17 percent on Greek government debt and 3 percent on Spanish bonds, according to two people briefed on the talks. The shared currency has dropped 12 percent versus the dollar this year on concern some nations in the euro zone may not be able to finance their debt. “It will take considerable time before the euro can regain full confidence from investors,” said Yuichi Onsen, chief strategist in Tokyo at T&D Asset Management Co., which helps oversee about $18 billion. “Sovereign problems in some euro- zone countries haven’t shown clear sign of a full resolution.” The euro’s recent rebound versus the dollar to above its 55-day moving average will probably fade as the currency approaches resistance to further gains, according to Bank of Tokyo-Mitsubishi UFJ Ltd. The euro dropped earlier after Germany’s Economy Ministry said in Berlin that factory orders, adjusted for seasonal swings and inflation, declined 0.5 percent in May. The median forecast of 30 economists in a Bloomberg News survey was for a 0.3 percent gain. The shared currency is approaching the line defining its trend lower at $1.2750 and will probably rise no higher than $1.30, Lee Hardman, a currency strategist in London at Bank of Tokyo, said in a research report today. The Swiss franc advanced 0.8 percent to 1.3299 per euro, from 1.3373 yesterday. The currency has gained 3.5 percent against its global peers this year, according to Bloomberg Correlation-Weighted Currency Indices. Swiss National Bank policy makers led by President Philipp Hildebrand said on June 17 that deflation risk has “largely disappeared,” ending the 15-month policy of countering what they called “excessive” gains by the franc. To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net

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