BLBG:Euro Near 3-Week Low Before Retail Report, ECB Meeting
The euro was 0.7 percent from a three-week low as signs of economic weakness in Europe add pressure on central bank policy makers meeting this week to consider fresh easing steps.
The 17-nation euro ended a four-day gain against the yen before a monthly report that may show the first back-to-back decline in European retail sales this year. The European Central Bank and the Bank of England will both hold policy meetings tomorrow. The pound held losses against the euro before figures forecast to show a slowdown in U.K. services growth. The yen touched a week-low before Bank of Japan (8301) officials begin a two- day meeting tomorrow.
“The European economy looks worse than expected,” said Hitoshi Asaoka, a senior strategist at Mizuho Trust & Banking Co. in Tokyo. “Investors are reluctant to keep buying the euro after it reached $1.30,” he said.
The euro slid 0.2 percent to $1.2898 as of 7 a.m. in London, having dropped from the four-month high of $1.3172 reached on Sept. 17. It touched $1.2804 on Oct. 1, the lowest since Sept. 11.
The yen traded at 100.89 per euro from 100.97 yesterday, and was at 78.23 per dollar from 78.16. The Japanese currency earlier touched 78.31 per dollar, the weakest since Sept. 21.
The British pound was at 79.98 pence per euro, having fallen 0.2 percent yesterday to 80.08. It fetched $1.6125 from $1.6134 yesterday.
European Retail
Retail sales in the euro area probably declined 0.1 percent in August from July when they fell 0.2 percent, according to the median estimate of economists surveyed by Bloomberg News before the European Union’s statistics office releases the data today. That would be the first two months of consecutive decline since the period ended December 2011.
ECB officials meet tomorrow in Frankfurt, with policy makers expected to keep the bank’s benchmark interest rate unchanged at a record-low 0.75 percent, according to a Bloomberg poll. ECB President Mario Draghi last month unveiled a program of unlimited bond purchases to ease borrowing costs for debt- ridden nations.
UBS AG Chairman and former ECB Governing Council member Axel Weber said yesterday in Moscow that the euro region’s festering debt crisis will “continue to linger” as the central bank fails to ease market disquiet and volatility.
The euro has weakened 4.9 percent in the past 12 months, according to Bloomberg Correlation Weighted Indexes. The yen declined the most among the 10 developed-nation currencies tracked by the gauge, falling 6.7 percent in the period. The dollar lost 3 percent.
BOJ Bets
The yen held a three-day decline against the dollar before the BOJ begins its policy meeting tomorrow. Officials expanded the Japanese central bank’s asset-purchase program last month in a bid to stimulate economic growth and achieve a 1 percent inflation goal.
Japan’s new Economy Minister Seiji Maehara this week pledged a closer watch over the BOJ to ensure it meets its target for consumer prices, adding that purchases of foreign bonds may be a powerful tool for easing.
The dollar may climb toward its highs in August and September versus the yen, MacNeil Curry, New York-based chief rates and currencies technical strategist at Bank of America Corp. wrote in a report yesterday.
A break above resistance at 78.18 to 78.24 “reinvigorates the uptrend” for dollar-yen, Curry wrote. Resistance is a level where orders to sell may be clustered. The greenback peaked at 79.66 yen on Aug. 20 and rose to as high as 79.22 on Sept. 19, according to data compiled by Bloomberg.
U.K. Services
In the U.K., a gauge of services based on a survey of purchasing managers may have dropped to 53 in September, according to a Bloomberg poll of analysts before Markit Economics and the Chartered Institute of Purchasing and Supply publish the report today. The measure climbed to 53.7 in August.
The Bank of England will probably keep its target for bond purchases at 375 billion pounds ($605 billion) at their meeting tomorrow, all 40 economists said in a separate Bloomberg survey.
Australia’s dollar sank today after data showed the nation’s trade deficit for August was three times wider than the median forecast of economists. The so-called Aussie dropped 0.5 percent to $1.0216.
In China, data today showed non-manufacturing industries in the world’s second-largest economy grew at the weakest pace since at least March 2011, fanning speculation the Reserve Bank of Australia will lower interest rates again following a quarter-point reduction yesterday. China is Australia’s biggest trading partner.
“The Reserve Bank will cut again probably next month,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia (CBA) in Sydney. “I don’t think the RBA will cut as much as the market is expecting, but those expectations have been one thing that has pushed the Aussie down.”
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
