Sept. 23 (Bloomberg) -- The dollar rose from a five-month low against the euro as reports from the U.S. and Europe increased investors’ views of a sluggish economic recovery, adding demand for the perceived safety of the greenback. The U.S. currency strengthened against the majority of its most-traded counterparts as the number of Americans seeking unemployment benefits unexpectedly rose, U.S. existing home sales were the second-lowest level on record and Europe’s services and manufacturing industries slowed more 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. “As far as housing is concerned, it’s a very deep hold to climb out of,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “General market risk appetite appears more vulnerable today so that’s contributing to the overall strength in the dollar.” The dollar strengthened 0.6 percent to $1.3327 at 11:27 a.m. in New York from $1.3406 yesterday, when it weakened to $1.3440, the lowest level since April 21. The dollar traded at 84.35 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 euro depreciated 0.8 percent to 112.39 yen, from 113.27. Stock Watch The Standard & Poor’s 500 Index dropped 0.1 percent. Crude oil traded at $74.69 a barrel, down 0.1 percent, after falling as much as 1.1 percent. 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. 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.” Housing Guage 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. “With rising risk aversion in play before today’s data that theme is going to continue,” said Andrew Wilkinson, senior market analyst at Interactive Brokers Group LLC in Greenwich, Connecticut. “The dollar will back some the euro’s gains over the past three sessions.” 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. The index of U.S. leading indicators rose in August more than forecast. The 0.3 percent gain in the New York-based Conference Board’s gauge of the prospects for the economy in the next three to six months follows a 0.1 percent increase in July. The index was forecast to rise 0.1 percent, according to the median estimate in a Bloomberg News survey of 56 economists. 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 Aussie fell 0.5 percent to 95.19 U.S. cents after three straight days of gains. “New Zealand data is majorly weakening the currency and helped drag down the Australian dollar,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. 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 weakened 0.2 percent to C$1.0329 from C$1.0308 yesterday. --With assistance from Lukanyo Mnyanda, Paul Dobson and Scott Hamilton in London, Emma Ross-Thomas in Madrid and Ron Harui in Singapore. Editors: Paul Cox, Dave Liedtka 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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