The euro headed for a fifth weekly loss against the dollar before a report that economists said will show consumer confidence declined in the region, making it harder for European leaders to contain their debt crisis.
The 17-nation currency was about 0.1 percent from the weakest in 11 years versus the yen as Spain and Italy prepare to sell debt next week after France’s borrowing costs rose at an auction yesterday. The dollar headed for weekly gains versus the yen and euro before a U.S. report forecast to show employers added the most jobs in three months in December. The Dollar Index (DXY) reached a one-year high.
“There’s not a huge amount of reasons to be wanting to own the euro at the moment,” said Chris Weston, an institutional trader at IG Markets Ltd. in Melbourne. “The fundamentals point to a weaker euro.”
The euro was little changed at $1.2787 at 8:24 a.m. in London having lost 1.5 percent this week, the longest stretch of declines since February 2010. It earlier fell to $1.2764, the lowest since September 2010. The euro was also little changed at 98.53 yen after falling to 98.48 yen yesterday, its weakest since December 2000. The dollar gained 0.1 percent to 77.16 yen, having risen 0.3 percent this week.
IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, rose 0.1 percent to 80.970 after reaching 81.062, the highest since Jan. 11, 2011.
European Outlook
European consumer confidence dropped to a two-year low last month, economists predict the European Commission will confirm today. An index of household sentiment (EUCCEMU) in the euro area fell to minus 21.2 from minus 20.4 in November, according to a Bloomberg News survey before the report. Retail sales (RSSAEMUM) in the region slid 0.4 percent in November, after rising 0.1 percent the prior month, a separate survey showed before the data from the European Union statistics office.
The euro fell yesterday after France sold 10-year bonds at an average yield of 3.29 percent, compared with 3.18 percent at a sale on Dec. 1. The bid-to-cover ratio, or the number of bids received for each unit of debt sold, fell to 1.64 from 3.05. France’s credit outlook was lowered by Fitch Ratings on Dec. 16.
Spain is scheduled to sell bonds maturing in 2015 and 2016 on Jan. 12. Italy will auction debt the following day.
German Chancellor Angela Merkel will meet French President Nicolas Sarkozy on Jan. 9 in Berlin to talk about increasing fiscal coordination among euro area states before the European Union leaders’ summit at the end of the month.
Merkel, Sarkozy
Japanese Finance Minister Jun Azumi told reporters in Tokyo today he understands the weakening of the euro against the yen will have a significant impact on companies that export their goods to the region. Japan sold the yen three times last year as its strength threatened to derail an export-led recovery.
The dollar rose against the euro and yen this week before a report forecast to show the U.S. added jobs in December, adding to signs the world’s largest economy is recovering.
“The news coming from the U.S. has been OK,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency-risk management firm. “We’re seeing just generally some U.S. dollar strength, which is mainly reflected in the euro.”
U.S. employers hired 155,000 workers last month, compared with a gain of 120,000 in November, according to a Bloomberg survey before today’s Labor Department report. That would be the most since September. The jobless rate (USURTOT) rose to 8.7 percent from 8.6 percent in the same period, a separate poll shows. U.S. companies added 325,000 workers in December, the most in records going back to 2001, ADP Employer Services said yesterday.
The dollar also headed for a weekly gain versus a majority of its major counterparts as stock losses boosted demand for safer assets. The MSCI Asia Pacific Index (MXAP) fell 1 percent today after a dropping 0.9 percent yesterday.
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
