The dollar traded near a five-month low against the euro before a report today that may show U.S. home sales were close to the weakest in 10 years, adding to signs the world’s largest economy is struggling to recover. The greenback was within half a yen of a one-week low versus Japan’s currency ahead of data tomorrow forecast to show durable goods orders dropped, giving the Federal Reserve more reason to expand monetary easing measures. New Zealand’s dollar fell the most in a week after a government report showed gross domestic product grew at a slower pace than economists forecast. “A further deterioration in U.S. economic prospects will almost certainly push yields lower,” said Khoon Goh, head of market economics and strategy in Wellington at ANZ National Bank Ltd., New Zealand’s biggest lender. “This will spell more dollar weakness.” The dollar traded at $1.3392 per euro as of 6:08 a.m. in London from $1.3405 in New York yesterday, when it fell to $1.3440, the lowest since April 21. The U.S. currency was at 84.61 yen from 84.50 yen yesterday, when it dropped to 84.28, the weakest since Sept. 15. The euro bought 113.34 yen from 113.27 yen. Financial markets in Japan, South Korea and China were closed today for holidays. Home Sales Sales of existing U.S. homes rose to a 4.1 million pace in August, behind only July’s 3.83 million as the weakest in a decade’s worth of data, according to a Bloomberg survey before today’s report. Economists say data tomorrow will show durable goods fell 1 percent last month, the biggest drop since August 2009, and a report on Sept. 28 will reveal consumer confidence declined to 53 in September from 53.5 in August. The dollar has weakened against 13 of its 16 major counterparts since the Fed said after its Sept. 21 meeting it “will provide additional accommodation if needed” to spur growth. The Federal Open Market Committee also said “inflation is likely to remain subdued for some time before rising to levels the committee considers consistent with its mandate.” Futures on the Chicago Mercantile Exchange show a 65 percent chance the central bank will keep its target rate for overnight bank lending between zero and 0.25 percent through its June 2011 meeting, up from a 52 percent probability a month ago. Kiwi Slides New Zealand’s dollar snapped a four-day rally as today’s economic-growth report spurred traders to reduce bets for interest-rate increases over the next 12 months. Gross domestic product increased 0.2 percent in the second quarter from the prior three months, Statistics New Zealand said, less than the 0.7 percent estimate in a Bloomberg survey. Swaps traders cut the size of the rate increase they expect from the Reserve Bank over the next 12 months to 54 basis points from 65 basis points yesterday, a Credit Suisse AG index showed. “The GDP data was clearly weaker than the market expected and noticeably weak compared to the Reserve Bank’s expectations,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “The Reserve Bank will remain on hold until at least the end of this year and probably presents some near-term headwinds for the New Zealand dollar.” New Zealand’s dollar slumped 0.8 percent to 73.26 U.S. cents, the biggest drop since Sept. 16, and weakened 0.7 percent to 61.99 yen. Ringgit Weakens Malaysia’s ringgit retreated from a 13-year high as a technical gauge traders use to predict price swings signaled the currency was poised to decline. The ringgit’s 14-day relative strength index versus the dollar was at 33 yesterday, approaching the level of 30 that signals a change of direction is imminent. Malaysia may experience a “slight” moderation in growth in the second half due to a weaker global economy, Prime Minister Najib Razak said on Sept. 21. “The appreciation pace has been a quite rapid and market participants could turn cautious as key levels are broken,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala Lumpur. “Investors would like to wait and see the confidence level about the economic outlook.” The ringgit dropped 0.1 percent to 3.0915 per dollar after rising to 3.0873 earlier today, the strongest since October 1997. Gains in the yen were tempered on speculation Japan will sell its currency again after intervening in foreign-exchange markets last week for the first time in more than six years. Bank of Japan board member Ryuzo Miyao said yesterday he expects the government’s intervention will help stabilize the currency markets. Finance Minister Yoshihiko Noda said last week Japan is ready to take bold action on the yen if necessary. “You’ll see Japanese intervention continuing,” Nader Naeimi, a Sydney-based strategist at AMP Capital Investors Ltd., which manages $85 billion, said in a Bloomberg Television interview. “The yen should weaken.” The yen has strengthened 1.4 percent versus the dollar since the intervention on Sept. 15 pushed Japan’s currency down to a one-month low. To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at Rswift5@bloomberg.net.

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