BLBG:Euro Weakens as French Economy Signals Slowing Growth in European Region
The euro traded at almost the lowest level since January against the dollar as French gross domestic product grew at a slower pace than previously estimated, adding to concern the European economy is stalling.
The 17-nation common currency fluctuated as U.S. durable goods orders rose more than forecast, adding to evidence of economic growth in America and a sign of decoupling between the U.S and the euro area. European Central Bank Executive Board member Lorenzo Bini Smaghi said policy makers shouldn’t shirk from using quantitative easing if it’s needed to avoid deflation.
“Most of the likely options for the ECB will be negative for the euro in fundamental terms,” said Noel Hebert, a credit strategist at Mitsubishi UFJ Securities USA Inc. in New York. “The trend in European GDP is pointing to recession, which in addition to looming maturity issues in both regional sovereigns and banks is likely to have President Mario Draghi and his ECB cohorts exploring alternatives for further easing.”
The euro fell 0.1 percent to $1.3044 at 5:01 p.m. New York time. It touched $1.2946 on Dec. 14, the weakest since January. The U.S. currency depreciated 0.1 percent to 78.09 yen. The euro dropped 0.2 percent to 101.86 yen.
Canada Strength
Canada’s currency reached to its strongest level in more than a week versus the greenback after reports showed the economic recovery gaining momentum in the U.S., the nation’s largest trading partner. The loonie, as the currency is known for the image of the waterfowl on the dollar coin, traded at C$1.0206, after reaching C$1.0181, the strongest level since Dec. 12.
The euro depreciated 1.3 percent this year against nine developed-nation counterparts as Europe’s crisis intensified, according to Bloomberg Correlation-Weighted Currency Indexes. The dollar has advanced 1.1 percent and the yen has gained 3.8 percent.
South Africa’s rand has declined 18.7 percent against the dollar in 2011, the most of the U.S. currency’s most-traded peers, according to Bloomberg data, followed by Mexican peso with a 10.8 percent loss. The yen has advanced 4 percent for the largest gain against the greenback.
French Economy
France’s GDP rose 0.3 percent from the second quarter, when it fell 0.1 percent, French statistics institute Insee in Paris said today. It had previously reported a gain o 0.4 percent. In the year, the economy expanded 1.5 percent, down from 1.7 percent in the previous quarter.
Futures traders decreased their bets from a record level that the euro will decline against the dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain -- so-called net shorts -- was 113,697 on Dec. 20, compared with net shorts of a record 116,457 a week earlier.
The Standard & Poor’s 500 Index rose 0.9 percent. U.S. 10- year notes fell, pushing the yield up eight basis points, or 0.08 percentage point, to 2.02 percent.
The markets have “a slightly bullish tone overall,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia in Toronto.
Orders for U.S. durable goods jumped in November by the most in four months, data showed today, helping to offset weaker-than-forecast consumer spending.
Sales of new U.S. homes rose in November to a seven-month high, adding to evidence of stabilization in the housing market. Purchases of single-family properties increased 1.6 percent to a 315,000 annual pace, figures from the Commerce Department showed today in Washington.
Congress passed a two-month payroll tax cut extension eight days before its scheduled expiration after House Republicans dropped their objections under growing political pressure.
IntercontinentalExchange Inc.’s Dollar Index, a gauge of the greenback against the currencies of six major U.S. trading partners, gained 0.1 percent to 79.997.
To contact the reporter on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
