The euro weakened for the first time in four days against the dollar and yen before a European report today forecast to add to signs the region’s debt crisis is weighing on consumer sentiment. The 17-nation currency dropped from near a two-week high versus the yen as economists said data tomorrow will show unemployment in the region increased to a record last month. European Central Bank President Mario Draghi meets U.S. Treasury Secretary Timothy Geithner today as he attempts to win over Bundesbank President Jens Weidmann on measures to ease the region’s debt woes. The ECB announces its next policy decision on Aug. 2 “Even if the ECB were to come up with some policy measures, it will take a considerable amount of time for them to take effect,� said Masakazu Sato, a foreign-exchange adviser at Gaitame Online Co. in Tokyo. “Economic data in the meantime will remain very weak, and the euro will continue to be sold each time such data comes out.� The euro dropped 0.4 percent to $1.2274 at 8:47 a.m. in London after rising 1.4 percent last week. The single currency declined 0.5 percent to 96.16 yen after climbing to 97.34 on July 27, the strongest level since July 17. The yen gained 0.2 percent to 78.34 per dollar. The European Commission will confirm today its index of consumer sentiment in the euro area declined to an almost three- year low of minus 21.6 in July, according to economists surveyed by Bloomberg News. The region’s jobless rate rose to 11.2 percent in June from 11.1 percent in May, a separate survey showed before the statistics office data tomorrow. Draghi Plan Draghi sparked a euro rally last week by pledging to do whatever it takes to preserve the currency, suggesting policy makers may intervene in bond markets. His proposal involves the European Financial Stability Facility buying government bonds on the primary market, buttressed by ECB purchases on the secondary market to ensure transmission of its record-low interest rates, two central bank officials said July 27 on condition of anonymity. Further ECB interest-rate cuts and long-term loans to banks are also up for discussion, one of the officials said. While the ECB’s commitment to preserve the euro is necessary, it’s not sufficient by itself to resolve the debt crisis, Moody’s Investors Service said in a report. Worst Performer The euro has weakened 3.1 percent in the past month, the worst performer of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 0.4 percent over the same period, and the yen gained 2.4 percent. “The euro will continue to struggle,� said Daisaku Ueno, a senior currency and debt strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “To resolve Europe’s debt crisis, monetary policy will have to bear a lot of the burden.� Demand for the dollar was tempered before the Federal Reserve starts a two-day meeting tomorrow amid speculation the central bank will signal additional stimulus. Fed Chairman Ben S. Bernanke said this month policy makers are “looking for ways to address the weakness in the economy should more action be needed to promote a sustained recovery in the labor market.� While the central bank refrained from introducing a third round of asset purchases at its June meeting, Bernanke indicated it’s an option. The pace of hiring in July failed to reduce the U.S. jobless rate, which has been stuck above 8 percent for more than three years, economists said before data this week. The median forecast of economists surveyed by Bloomberg is for an increase in payrolls of 100,000 workers when the Labor Department releases its report on Aug. 3. That would leave the unemployment rate unchanged at 8.2 percent. “The Fed is likely to continue to indicate that it’s ready to introduce additional monetary easing,� Mitsubishi UFJ’s Ueno said. “Monetary easing from the Fed is positive for stocks, and the dollar is susceptible to being sold on risk-on sentiment.� To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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