The euro traded near a seven-week low against the dollar amid concern a failure to craft a rescue package for Ireland will allow the nation’s banking crisis to spread to other members of the common currency. The dollar erased gains versus the yen after economic data showed U.S. housing starts dropped more than forecast in October while consumer prices rose less than anticipated. Irish Finance Minister Brian Lenihan said talks with the European Commission, the European Central Bank and the International Monetary Fund on aid for the country’s banks will start tomorrow. The Dollar Index was near a seven-week high. “Concerns about the region’s debt crisis weigh on the euro,” said Jeremy Stretch, executive director of foreign- exchange strategy at Canadian Imperial Bank of Commerce in London. “That’s given the dollar a boost, and the euro stays under pressure. Ireland’s problem is not so much a sovereign issue as a banking issue.” The euro was up less than 0.2 percent to $1.3511 at 8:37 a.m. in New York, from $1.3489 yesterday, when it touched $1.3448, the weakest level since Sept. 28. The shared currency traded at 112.54 yen, from 112.38 yen, after dropping 0.4 percent yesterday. The dollar traded at 83.30 yen, compared with 83.29 yesterday, when it reached 83.59 yen, the highest level since Oct. 5. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, was at 79.217, from 79.210 yesterday, when it reached 79.461, the highest level since Sept. 28. EU, IMF Talks European finance ministers started work on possible aid for Ireland’s debt-laden banks, stopping short of an immediate bailout package. Finance chiefs from the 16-country euro region lauded Ireland’s budget cuts, echoing the rhetorical support offered in the early stages of Greece’s debt trauma before a rescue became necessary. Ireland said it doesn’t need EU money. Irish Prime Minister Brian Cowen told Parliament in Dublin the nation hadn’t lodged an aid request and the goal is “a credible, efficient and above all workable solution that will provide assurance to the markets.” “Investors are poised to unwind their positions rather than adding new ones amid Europe’s lingering issues, and the bias is for the dollar to be bought,” said Kuniyuki Hirai, manager of foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest lender. “The euro will struggle to rise toward year-end.” Austrian Finance Minister Josef Proell said yesterday he’s considering withholding his country’s share of the next part of Greece’s 110 billion-euro ($148 billion) rescue, saying the Athens government missed a revenue-raising target. Greece’s near-default in May triggered Europe’s sovereign-debt crisis. ‘On a Good Path’ Proell toned down the remarks later, telling journalists in Brussels that Austria was prepared to meet its pledge and that Greece was “on a good path.” He said today the next tranche of aid for Greece will be delayed until January, adding that “things are looking significantly better now” in the country. The euro may drop as such reluctance to contribute to the rescue package undermines confidence in Europe’s ability to deal with debt crises, said Commerzbank AG. “Even if Austria is responsible for less than 3 percent of the aid payments for Greece, comments of this nature are detrimental for the euro,” a team of analysts led by Ulrich Leuchtmann in Frankfurt wrote in a research note today. They can “constitute a slippery slope if they cause a widespread erosion of solidarity among the donor countries.” Loss for Year The euro has lost 7.6 percent this year in a measure of 10 developed-nation peers, Bloomberg Correlation-Weighted Currency Indexes show. The dollar is down 1.1 percent, while the yen has gained 12 percent, the indexes show. The dollar was supported as Atlanta Federal Reserve President Dennis Lockhart said additional bond purchases by the central bank aren’t intended to weaken the greenback. Lockhart said the program to buy $600 billion in Treasuries is not intended to weaken the dollar or monetize the debt. The effect of the policy would be “measured,” Lockhart said in remarks yesterday in Montgomery, Alabama. The Fed announced on Nov. 3 it would make the bond purchases, a program known as quantitative easing, through June. The pound was near a three-week high against the euro after data showed U.K. jobless claims fell in October. The number of people receiving jobless benefits declined by 3,700 from September to 1.47 million, the first decline since July, the Office for National Statistics said. The median forecast of 23 economists was for a rise of 6,000. Three-Way Split A separate report showed the Bank of England’s Monetary Policy Committee split three ways for a second month as some officials became more concerned that Britain’s bout of inflation will dislodge price expectations. Sterling traded at 84.92 pence per euro, compared with 84.91 pence yesterday. It reached 84.49 pence on Nov. 12, the strongest since Sept. 21. The pound was little changed at $1.5882 after tumbling as much as 1.3 percent yesterday, the most in six months. The Swedish krona depreciated 0.1 percent to trade at 6.9674. Sweden’s currency lost as much as 0.6 percent earlier, surpassing 7 per dollar for the first time since Sept. 21. To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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