The euro dropped from a five-month high against the dollar as economic reports from the U.S. and Europe increased investors’ views of a sluggish economic recovery, damping demand for riskier assets. The 16-nation currency fell versus most of its major counterparts as the number of Americans seeking unemployment benefits unexpectedly rose and Europe’s services and manufacturing industries slowed this month more than economists forecast, while U.S. home sales were slightly stronger than forecast. The yen strengthened for a fourth straight day against the dollar, paring declines that followed Japan’s Sept. 15 sales designed to weaken its currency to protect an export-led economic recovery. “The story is about the euro and the weak economic data,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. “We’re still in a trough. We collapsed over the summer. The euro fell 0.7 percent to $1.3319 at 10:10 a.m. in New York, from $1.3406 yesterday, when it advanced to $1.3440, the highest level since April 21. The euro depreciated 0.7 percent to 112.47 yen, from 113.27. The dollar traded at 84.49 yen, compared with 84.50 yen yesterday, when it dropped to 84.28, the lowest level since Japan’s intervention on Sept. 15. That day the yen reached a 15-year high. The Standard & Poor’s 500 Index dropped 0.6 percent. European Data A composite index based on a survey of euro-area purchasing managers in both services and manufacturing fell to 53.8 from 56.2 in August, London-based Markit Economics said today. The median forecast of 15 economists in a Bloomberg News survey was for a reading of 55.7. A reading above 50 indicates expansion. Home loans granted by lenders to buy properties dropped to 31,767 from a revised 34,219 in July, the London-based British Bankers’ Association said in an e-mailed statement today. The reading is down 22 percent from a year earlier. Ireland’s economy unexpectedly shrank in the second quarter as gross domestic product fell 1.2 percent, after expanding 2.2 percent in the previous quarter. “There was a lot of weakness in European data and escalating issues in Ireland refocused the market there,” said Camilla Sutton, a Bank of Nova Scotia currency strategist in Toronto. “It’s a day of relief for the U.S. dollar. The biggest piece of data the market is waiting for housing data coming at 10 a.m.” Home Marketing Sales of U.S. previously owned homes rose in August to the second-lowest level on record, indicating housing remains depressed a year after the economic recovery began. Purchases of existing houses climbed to a 4.13 million annual pace, in line with the median forecast of economists surveyed by Bloomberg News and second only to July’s 3.84 million rate as the weakest in a decade’s worth of data, the National Association of Realtors said today in Washington. U.S. initial jobless claims increased by 12,000 to 465,000 in the week ended Sept. 18, Labor Department figures showed today in Washington. Jobless claims were forecast to stay unchanged at 450,000, according to the average estimate of 47 economists surveyed by Bloomberg. Kiwi Trends New Zealand’s dollar dropped for the first time in five days as a report showed the economy grew less in the second quarter than economists predicted. Gross domestic product expanded 0.2 percent from the prior three months, Statistics New Zealand said. The median forecast of 12 economists in a Bloomberg News survey was for an increase of 0.7 percent. New Zealand’s dollar slumped 1.5 percent to 72.75 U.S. cents, the biggest loser against the greenback, and slid 1.6 percent to 61.42 yen. The Canadian currency weakened to a three-week low, falling for the second day, against its U.S. counterpart, damped by the global economic data. The loonie, as the currency is nicknamed, is the worst performer among the U.S. dollar’s 16 most-traded counterparts over the past week. The loonie weakened 0.4 percent to C$1.0352 from C$1.0308 yesterday. To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net Catarina Saraiva in New York at asaraiva5@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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