The Dollar Index declined for a third day after Moody’s Investors Service put the U.S. under review for a credit downgrade. The greenback fell against the Swiss franc and gold advanced to records in London and New York after Federal Reserve Chairman Ben S. Bernanke said the central bank is prepared to take additional action, including buying more government bonds, to boost the economy. Japan’s yen fell back from its strongest level since March 17 amid speculation the nation may intervene in markets to limit the currency’s gains. A report today may show U.S. retail sales dropped in July. The Moody’s comments “reinforce the dollar-negative sentiment,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “The dollar has staged quite a sharp reversal and the market is now on heightened quantitative-easing watch, which will leave the dollar vulnerable to weaker U.S. data.” IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six U.S. trading partners including the euro, yen and pound, slid 0.2 percent to 75.09 as of 6:56 a.m. in New York. The dollar was 0.1 percent lower at $1.4182 per euro from $1.4167 yesterday, when it slid 1.4 percent, its biggest loss since Jan. 13. It fell as low as 78.47 yen, the least since March 17, before rebounding to trade little changed at 79.01 yen. Japan’s currency weakened 0.2 percent to 112.07 per euro, from 111.86. Rating on Review The Dollar Index reached its lowest level since July 2008 in May as asset purchases by the Fed and signs of slowing growth weighed on the U.S. currency. It rebounded to its highest level since March earlier this week, after the U.S. central bank ended its second bond-buying program and soaring Italian and Spanish bond yields raised concern that Europe’s debt crisis was spreading beyond Greece, Ireland and Portugal. The euro pared its advance against the dollar as Italian borrowing costs rose at a debt sale today. The U.S., rated Aaa by Moody’s since 1917, was put on review for the first time since 1995 on concern the nation’s debt threshold will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes, even though the risk is low, Moody’s said yesterday. Bernanke will testify for a second day to U.S. lawmakers today, speaking before the Senate, after appearing before the House Financial Services Committee yesterday. The Fed is prepared to take additional action if the economy appears to be in danger of stalling, he said yesterday. Retail Sales Outlook U.S. President Barack Obama is considering summoning congressional leaders to Camp David this weekend to work on a plan to raise the debt ceiling after yesterday’s negotiations on a deficit-cutting plan of at least $2 trillion stalled, according to two people familiar with the matter. U.S. retail sales fell 0.1 percent in June, following a 0.2 percent decline in May, according to a Bloomberg News survey before the Commerce Department report today. “If the data is soft, it would give the market more of an excuse to anticipate more quantitative easing,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “More important is the debate about the U.S. debt ceiling. Any signs that they can’t get toward an agreement may affect risk appetite.” Gold Record Gold rose to a record as concern the Fed may embark on additional stimulus boosted demand for the metal as a store of wealth. Immediate-delivery gold rose as much as $11.73, or 0.7 percent, to $1,594.10 an ounce. The Swiss franc appreciated 0.2 percent to 1.15642 per euro after reaching 1.14945, an all-time high. It also touched a record 80.83 centimes per U.S. dollar. The yen was little changed after reversing a 0.7 percent intraday gain versus the U.S. currency, tumbling as much as 0.8 percent as London markets opened. “Against the backdrop of joint European Union and U.S. woes, the recent outperformance of the franc, the yen and gold is understandable and likely to persist,” BNP Paribas SA strategists including Ray Attrill and Steven Saywell wrote in an investor report today. Japanese Finance Minister Yoshihiko Noda said it would be “problematic” if recent one-sided currency movements continue. That fueled concern Japan will sell yen to halt gains. Noda repeated today he will continue to closely watch the market. Japan last sold yen to slow its rise when the Group of Seven nations joined in coordinated action on March 18 after the yen surged to a postwar record of 76.25 per dollar the previous day. Yen gains threaten Japan’s recovery from the March 11 earthquake and tsunami. ‘Nervous’ Market “It’s not confirmed intervention at this stage and we haven’t had any commentary from Japanese officials,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. “Clearly the market is nervous as we probe the lowest levels since March 17 and certainly the jawboning from officials has stepped up.” A Japanese government official said authorities can intervene in currency markets without warning. Speaking to reporters in Tokyo on condition of anonymity, the person declined to comment specifically on any intervention. Swiss central bank Vice President Thomas Jordan said policy makers are “very concerned” about recent currency developments after the franc appreciated to a record against the euro. South Africa’s rand fell to its lowest level in more than a week against the euro and declined versus the dollar on concern strikes by steel, engineering and energy workers will slow growth in Africa’s biggest economy. The rand slipped as much as 1.4 percent to 9.7665 per euro, the weakest level since July 5, before trading 1.1 percent down at 9.7309. South Africa’s currency retreated 0.9 percent against the dollar to 6.8580. To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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