The euro traded close to a two-week low against the dollar as Spanish ministers gathered in Madrid to present a fresh round of budget cuts amid the prospect of a sovereign bailout. The shared currency slid for an eighth day versus the yen, the longest streak in four months, after economic confidence in the euro area unexpectedly fell in September. The Dollar Index was little changed before a report economists said will show orders for U.S. durable goods slumped in August. The pound rose for the first time in four days against the greenback after a government report showed the economy shrank less than previously estimated in the second quarter. “The focus is on Spain,� said Lutz Karpowitz, a senior foreign-exchange strategist at Commerzbank AG in Frankfurt. “There is a little bit of pressure on the euro, and we expect that to continue because the tensions remain. There is speculation that Spain may have to tap the rescue funds.� Europe’s shared currency was little changed at $1.2867 at 7:25 a.m. New York time, after declining to $1.2835 yesterday, the lowest since Sept. 12. The euro fell 0.2 percent to 99.93 yen, extending its run of declines to the longest since May 31. The yen was little changed at 77.67 per dollar. The euro will probably weaken to $1.22 or $1.23 by year- end, Karpowitz predicted. Spain’s cabinet is expected to give a news conference at about 2 p.m. after today’s meeting. Ministers will explain how Prime Minister Mariano Rajoy plans to meet his commitment to cut the deficit by at least 18 billion euros next year, defying tens of thousands of demonstrators who fought with police this week. Consumer Sentiment An index of executive and consumer sentiment in the 17- nation euro area dropped to 85 from 86.1 in August, the European Commission in Brussels said today. Economists had forecast no change in the gauge, the median of 28 estimates in a Bloomberg News survey showed. The euro is still on track for a 2.2 percent advance against the dollar this month, amid speculation that the European Central Bank will buy bonds from Spain and other euro- region nations to stem market turmoil. The ECB’s plan, announced by President Mario Draghi on Sept. 6, requires nations to request aid that would come with strict conditions attached. Analysts have raised their year-end estimates for the euro by one cent this month, to $1.27 from $1.26, according to analyst estimates compiled by Bloomberg. The revision comes amid optimism policy makers are working toward a solution for the debt crisis and after the Federal Reserve said on Sept. 13 it will buy $40 billion of mortgage-backed securities each month until the labor market improves. ‘Harsh Austerity’ “Rajoy may attempt to push through some harsh austerity measures today,� said Melinda Burgess, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in London. “Pressure is intensifying on Spain to ask for a bailout and if they took one that would be a positive for the euro.� The Dollar Index (DXY) was at 79.84 after reaching 80.012 yesterday, the most since Sept. 12. Bookings for U.S. goods meant to last at least three years decreased 5 percent, the most since January 2009, after surging 4.1 percent in July, according to the median forecast of 79 economists surveyed by Bloomberg. The pound climbed 0.2 percent to $1.6198 and advanced 0.3 percent to 79.38 pence per euro, after appreciating to 79.24 pence, the strongest level since Sept. 6. U.K. gross domestic product fell 0.4 percent in the second quarter, instead of the 0.5 percent decline estimated last month, the Office for National Statistics said. To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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