The dollar dropped to one-week lows against the euro and yen and headed for weekly declines before reports forecast by economists to show U.S. consumer spending growth slowed in April and pending home resales decreased. The Swiss franc rallied to a record against the euro as Europe’s sovereign-debt crisis encouraged demand for a refuge and the nation’s leading economic indicator held at the highest level in almost five years. The yen fell against the euro as Japan’s credit outlook was lowered by Fitch Ratings. The krona climbed against the dollar as a report showed Sweden’s economy grew for a sixth consecutive quarter. “The market is more concerned about the U.S. than it is about Europe,” said Sonja Marten, a currency strategist at DZ Bank AG in Frankfurt. “We have weak growth in the U.S.” The dollar depreciated 0.6 percent to $1.4230 per euro at 7:37 a.m. in New York, from $1.4145 yesterday, after reaching $1.4279, the weakest level since May 20. The greenback fell 0.3 percent to 81.07 yen, from 81.29, after touching 80.84, the lowest level since May 17. The yen declined 0.4 percent to 115.37, from 114.97. Growth in U.S. consumer spending slowed in April to 0.5 percent, the smallest gain in three months, according to the median forecast of 81 economists in a Bloomberg News survey before today’s Commerce Department report. Pending home resales fell 1 percent last month, economists predicted before the National Association of Realtors released figures. ‘Weak Fundamental Data’ “All things considered, the weak fundamental data should provide a sell-dollars environment,” Sacha Tihanyi, a senior currency strategist in Hong Kong at Scotia Capital, the investment banking unit of Bank of Nova Scotia, wrote in a research note today. Interest-rate futures contracts show a 24 percent chance that the Federal Reserve will increase borrowing costs in March 2012, compared with 47 percent odds a month ago. The U.S. central bank has kept its fed funds target at zero to 0.25 percent since December 2008. The European Central Bank raised its main refinancing rate to 1.25 percent last month. The euro dropped to a record low against the Swiss franc as an index of executive and consumer sentiment in the euro region slid to 105.5 this month from 106.2 in April. The median forecast of economists in a Bloomberg News survey was for a drop to 105.7 from a previously reported 106.1. Luxembourg’s Prime Minister Jean-Claude Juncker, who heads a group of euro-area finance chiefs, said yesterday the International Monetary Fund may not release its share of aid to Greece next month. ‘Weighing’ on Euro “Concerns about sovereign debt are spreading in the region, weighing on the euro,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s third-biggest bank by market value. The euro has weakened 2.5 percent over the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The franc has strengthened 4.1 percent, and the yen has risen 3.2 percent. The franc remained higher after the KOF Swiss Economic Institute in Zurich said in an e-mailed statement that a monthly gauge that aims to predict the Swiss economy’s direction about six months ahead remained this month at its April level of 2.30, the highest since August 2006. The euro dropped for a fourth day against the franc, declining 0.4 percent to 1.2194 after touching 1.2165, the lowest level since the shared currency’s 1999 debut. Drop in Yen The yen weakened against most of its major counterparts as Fitch lowered Japan’s outlook to negative from stable. The company’s long-term local currency rating for Japan is AA- and long-term foreign currency rating is Aa. “Japan’s sovereign credit-worthiness is under negative pressure from rising government indebtedness,” Andrew Colquhoun, head of Fitch’s Asia-Pacific Sovereigns team, said in a statement today. “A stronger fiscal consolidation strategy is necessary to buffer the sustainability of the public finances against the adverse structural trend of population aging.” Japan’s government debt is projected to reach 219 percent of gross domestic product next year, the Organization for Economic Cooperation and Development said this week. Sweden’s krona climbed 0.7 percent to 6.2504 after advancing to 6.2245, the strongest level since May 11. It was little changed at 8.9018 per euro. The nation’s gross domestic product expanded 0.8 percent in the three months through March, compared with revised 1.6 percent growth in the fourth quarter, Stockholm-based Statistics Sweden said today. New Zealand’s dollar rose to the highest level since March 2008 after Finance Minister Bill English said China Investment Corp., a sovereign-wealth fund, is interested in buying his country’s government bonds at auction. New Zealand’s dollar climbed 0.5 percent to 81.59 U.S. cents after advancing to 81.99 cents. The currency has gained 2.4 percent this week. To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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