BLBG:Euro Remains Lower Before German Business Confidence Data
The euro approached a seven-week high versus the dollar after German business confidence fell less than some economists forecast, suggesting the region’s largest economy can withstand the sovereign-debt crisis.
The 17-nation currency strengthened against the yen as German Finance Minister Wolfgang Schaeuble meets in Berlin today with his French counterpart Pierre Moscovici to discuss ways to resolve the turmoil. Sweden’s krona appreciated against all its 16 major counterparts after retail sales increased more last month than economists estimated.
“Some in the market had expected a much worse report and that’s why the euro gained some ground” said Peter Rosenstreich, chief currency analyst at Swissquote Bank SA in Geneva. “The key number may be softer than expected, but it’s still a decent read, and is consistent with the economy that remains resilient. It’s not an absolute collapse.”
The euro rose 0.1 percent to $1.2520 at 11:01 a.m. in London after climbing to $1.2590 on Aug. 23, the strongest level since July 4. The common currency gained 0.1 percent 98.50 yen. It reached 99.18 yen on Aug. 21, the highest since July 5. The dollar was little changed at 78.69 yen.
U.K. financial markets are shut today in observance of the Summer Bank Holiday.
The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 102.3 from 103.2 in July. The lowest prediction in a Bloomberg News survey of economists was for a decline to 101.
Renewed Determination
German Chancellor Angela Merkel told officials in her coalition calling for a Greek exit from the euro to “weigh their words” as she signaled a renewed determination to keep the single currency intact.
Asked about comments by a party leader calling for Greece to leave the currency, Merkel told ARD television such comments were damaging as crisis fighting reaches a “decisive phase.”
ECB President Mario Draghi may provide further hints on policy when he speaks at the Federal Reserve’s annual symposium in Jackson Hole, Wyoming, on Sept. 1.
The euro has weakened 4.8 percent in the past six months, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes as Europe’s debt crisis worsened. The yen was the best performer, rising 5.5 percent, and the dollar appreciated 2.7 percent.
‘Further Action’
Fed Chairman Ben S. Bernanke will also deliver a speech in Jackson Hole, on Aug. 31.
“There is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery,” Bernanke wrote in a letter dated Aug. 22 to California Republican Darrell Issa, chairman of the House Oversight and Government Reform Committee.
Futures traders cut bets the euro will weaken against the dollar, figures from the Washington-based Commodity Futures Trading Commission showed. The difference in the number of wagers by hedge funds and other large speculators on a decline in the European currency compared with those on a gain was 123,932 on Aug. 21, down from 137,810 a week earlier.
“The decrease in euro shorts indicates substantial expectations for some form of U.S. monetary easing,” said Makoto Noji, a foreign-exchange strategist at SMBC Nikko Securities Inc. in Tokyo.
The krona strengthened as consumers helped to propel an expansion in the largest Nordic economy.
Retail sales climbed an annual 2.4 percent in July from a revised 1 percent the previous month, Statistics Sweden said. The krona has appreciated 8.3 percent against the euro this year as overseas investors sought safer assets.
The Swedish currency rose 0.3 percent to 6.5846 per dollar after appreciating to 6.5780, the strongest since April 3. It gained 0.3 percent to 8.2412 versus the euro.
To contact the reporter on this story: Anchalee Worrachate in London at Aworrachate@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
