BLBG:Euro Falls for Second Day Before ECB Meeting; Aussie Advances
The euro weakened for a second day against the dollar amid speculation the European Central Bank will use its policy meeting tomorrow to signal the likelihood of future economic stimulus.
The common currency fell against all except one of its 16 major counterparts before a report that economists said will show consumer-price inflation in the region slowed last month. Australia’s dollar strengthened after the nation posted a smaller-than-estimated trade deficit. The yen was little changed as the Bank of Japan (8301) started a two-day gathering at which it is forecast to boost bond purchases to combat deflation.
“A rate cut is still an option for the ECB, so we can’t willingly buy the euro yet,” said Yoshitsugu Fujita, an assistant vice president of global markets at Sumitomo Mitsui Trust Bank Ltd. in New York. “It’s become clear that Europe remains fragile.”
The euro declined 0.1 percent to $1.2803 at 7:58 a.m. in London after also falling 0.2 percent yesterday. The single currency dropped 0.2 percent to 119.61 yen. The yen was little changed at 93.42 per dollar.
The euro-area jobless rate rose to a record 12 percent in the first two months of this year, the statistics office said yesterday, adding to signs the currency bloc’s recession extended into the first quarter. The ECB, which has held its key rate at 0.75 percent since July, forecasts the economy will contract 0.5 percent this year.
The central bank will keep its benchmark rate unchanged tomorrow, according to 54 of 56 economists surveyed by Bloomberg News. Two predict a reduction to 0.5 percent.
The euro has weakened 1.9 percent in the past month, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen and the dollar were both little changed.
The so-called Aussie gained 0.1 percent to $1.0463 and rose 0.2 percent to 97.84 yen.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
