BLBG:Euro Declines for Third Day Before French, Italian Data
The euro fell for a third day amid speculation data will add to evidence that Europe’s failure to resolve its debt crisis is weighing on the region’s economy.
The 17-nation currency slid to its lowest level in a week against the yen before a report analysts said would show Italian industrial production decreased in August. Japan’s currency gained against most of its 16 major peers as declines in stocks boosted demand for safer assets. Losses in the euro were limited before Spain’s Prime Minister Mariano Rajoy meets French President Francois Hollande today in Paris as investors weigh whether the Iberian nation will ask for a bailout.
“The euro is the least desirable currency,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “Europe’s economy remains in a worse state than the U.S. and Japan.”
The euro weakened 0.1 percent to $1.2873 at 8:21 a.m. London time, after earlier touching $1.2835, the lowest since Oct. 1. It declined 0.1 percent to 100.74 yen, after sliding to 100.44, also the least since Oct. 1. The yen was little changed at 78.29 per dollar.
The euro may fall below $1.20 by March, Ueda forecast.
The MSCI Asia Pacific Index of shares headed for a third day of declines, losing 0.9 percent.
Industrial Production
Implied volatility among major currencies, which signals the expected pace of price swings, was 7.7 percent today, according to a JPMorgan Chase & Co. gauge of Group-of-Seven currencies. That’s up from an almost five-year low of 7.5 percent reached on Oct. 5. Increased volatility makes investments in currencies with higher key lending rates less attractive because the risk in such trades is that market moves will erase profit.
French industrial production rose 1.5 percent in August, from the previous month, when it increased a revised 0.6 percent. The median estimate of 21 analysts in a Bloomberg survey called for a 0.3 percent decline.
Separate data will show Italian output fell 0.5 percent during the same month, according to the median of 18 estimates in a Bloomberg survey. France is the euro area’s second-largest economy and Italy is the third-biggest.
The euro has depreciated 5.6 percent over the past year, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 0.3 percent and the yen weakened 3.6 percent.
To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net.
