THE euro declined for a third day against the dollar before data this week that analysts said will show the 17-nation currency bloc’s economy contracted for a sixth consecutive quarter in the three months through March.
The shared currency was little changed after rising to a more-than-three-year high against the yen before euro-area finance ministers met in Brussels on Monday. The dollar rose versus 13 of its 16 major counterparts after benchmark 10-year Treasury yields climbed to the highest in seven weeks.
“We are going to see growth numbers [that] are likely to be fairly disappointing, underlining the fact that the euro is vulnerable,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London.
“There’s also a realization that the dollar story is holding up fairly well when we have 10-year Treasury yields at 1.90 percent. We expect more weakness in the euro, and see it trading below $1.25 toward the end of this year,” he added.
The euro dropped 0.1 percent to $1.2976 at 10:04 a.m. (London time) on Monday. It traded at ¥131.95, after reaching ¥132.40, the highest since January 2010. The Japanese currency was little changed at ¥101.70 per dollar after depreciating to ¥102.15, the weakest level since October 2008.
GDP contraction
Euro-region gross domestic product (GDP) shrank 0.1 percent in the first quarter of 2013, after contracting 0.6 percent in the previous three months, the European Union’s statistics office in Luxembourg will say on May 15, according to the median estimate of 39 economists in a Bloomberg News survey.
The US economy expanded at a 2.5-percent annualized rate in the first quarter, the Commerce Department in Washington said on April 26. A report from the department at 8:30 a.m. (local time) on Monday would show that retail sales fell for a second month in April, based on a Bloomberg News survey of economists.
US 10-year yields were at 1.90 percent, after touching 1.94 percent, the most since March 26, according to Bloomberg Bond Trader data.
