The Dollar Index fell to an eight- month low on speculation reports this week will add to evidence the economic recovery is slowing, fueling bets the Federal Reserve will add to monetary easing. The dollar was set for a quarterly loss versus all 16 major counterparts amid growing speculation about another round of so- called quantitative easing. The Swedish krona rose versus the euro and dollar after a report showed higher-than-expected consumer confidence in the Nordic country. “We’re seeing continued dollar weakness on the back of weak data fueling expectations of quantitative easing,” said Niels Christensen, a currency strategist in Copenhagen at Nordea Bank AB. “In the current environment, it’s hard to see what will stop the downward trend in the dollar.” The Dollar Index dropped to 78.616, the lowest level since January, before trading at 78.833 as of 9:34 a.m. in London from 79.014 in New York yesterday. The index tracks the dollar against the currencies of six major U.S. trading partners. The U.S. currency was at $1.3594 per euro from $1.3585, after depreciating to $1.3639, the weakest since April 15. The yen was at 83.64 per dollar from 83.87, after reaching 83.50, the strongest since Sept. 15. The euro was at 113.69 yen from 113.94. ‘Weak Currency’ The Institute for Supply Management-Chicago Inc. is forecast to report tomorrow that its business barometer fell to 55.7 this month from 56.7 in August, according to the median estimate of economists in a Bloomberg News survey. Figures greater than 50 signal expansion. The dollar fell yesterday as a report showed confidence among U.S. consumers fell in September to the lowest level in seven months. “As long as there’s a risk of quantitative easing from the Fed, the dollar is going to be a weak currency,” said Jane Foley, a senior foreign-exchange strategist at Rabobank International in London. Federal Reserve Bank of Atlanta President Dennis Lockhart said the debate over a new round of asset purchases will “intensify” soon. “Policy makers must come to grips with the question of whether there is anything they can do to improve the situation in the economy,” Lockhart said in the text of a speech yesterday in Sewanee, Tennessee. The dollar has declined 10 percent versus the euro this quarter, the worst performance among the European currency’s 16 major counterparts. The greenback has pared this year’s advance to 5.4 percent. The yen rose against the euro earlier and reached its strongest versus the its U.S. counterpart since Japan intervened to weaken it. The Tankan survey showed business confidence improved at a slower pace. Japanese Sentiment The BOJ’s quarterly index of sentiment at Japan’s large manufacturers rose by 7 points in September, the smallest improvement since March 2009. The yen remains stronger than the 89.44 per dollar average estimated by large manufacturers for the six months to March 2011 in the report. The Ministry of Finance in Tokyo will report tomorrow the amount of yen the central bank sold from Aug. 28 through Sept. 28 to curb appreciation in the currency. Demand for the yen has been tempered amid speculation Japan will sell its currency again after doing so on Sept. 15 for the first time since 2004. “Investors remain cautious about Japan’s intervention,” Himawari Securities’ Yashiro said. “They are hesitant to sell or buy the dollar-yen.” Sweden’s krona appreciated 0.3 percent to 9.1574 per euro and was 0.4 percent stronger against the dollar at 6.7356. It touched 9.0921 per euro on Sept. 22, the strongest since Oct. 15, 2007. The country’s consumer confidence index climbed to 28.4 in September, the most since August 2000, the National Institute of Economic Research in Stockholm said today. That beat the 24 average estimate of 11 economists in a Bloomberg survey. To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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