The euro weakened to a one-month low against the dollar and fell for a seventh day versus the yen as traders increased bets the European Central Bank will cut interest rates, decreasing the appeal of the region’s assets. The 16-nation currency also declined after Standard & Poor’s said yesterday it may lower Spain’s credit rating and Germany said it will spend 50 billion euros ($66.6 billion) to support its economy. The yen rose against the dollar as stocks slid, boosting the Japanese currency’s attractiveness as a haven. The New Zealand dollar fell to a four-week low after S&P said it may cut the country’s foreign-currency credit rating. “We are bearish on the euro,” said Geoffrey Yu, a foreign-exchange strategist at UBS AG in London. “Macroeconomic data releases suggest growth conditions in the euro zone will remain under considerable stress, but the policy response from the ECB is not decisive enough. It will have to catch up.” The euro traded at $1.3305 as of 7:10 a.m. in New York from $1.3362 yesterday. It earlier touched $1.3222, the lowest level since Dec. 11. UBS, which expects an ECB rate cut of 50 basis points on Jan. 15, said investors should sell the euro against the dollar. It has a euro target of $1.2850. The euro fell to 117.71 yen, the lowest since Dec. 7, before trading at 118.79 yen from 119.19 yen yesterday. The seven-day drop matched the longest losing streak since the euro was introduced 10 years ago. The currency had a similar period of depreciation against the yen in August 2003. The dollar traded at 89.18 yen from 89.22. Against the British pound, the common currency traded at 90.39 pence. UBS forecast the euro will weaken to 86 pence in three months. New Zealand Dollar The New Zealand dollar fell to 55.72 U.S. cents from 57.57 cents yesterday after S&P revised its outlook for the South Pacific nation’s AA+ foreign-currency credit rating to “negative” from “stable.” The Australian dollar slid to 67.27 U.S. cents from 68.19 cents after prices of oil and other commodities the country exports fell. The British pound declined to $1.4679, from $1.4822 yesterday after reports today showed home sales dropped the most since 1978 and retail sales had the worst December in 14 years. Officials from major countries should intervene in the currency market to stop the yen from rising, Fujio Mitarai, chairman of Keidanren, Japan’s largest business lobby, told reporters today in Tokyo. It would be better for Japan’s currency to move in a range of five yen above or below 100 to the dollar, said Mitarai, who is also chairman of Canon Inc. Rate Outlook The ECB has reduced interest rates only half as much as the Federal Reserve in the past six months. A Credit Suisse Group AG gauge of probability based on overnight index swaps indicated the ECB will lower its 2.5 percent main rate by at least 50 basis points this week, with odds of 7 percent that the cut will be deeper. The median forecast of 59 economists surveyed by Bloomberg News is for a 0.5 percentage-point reduction. The Fed lowered its target lending rate in December to a range of zero to 0.25 percent, while the Bank of England lowered its main rate last week by a half-percentage point to 1.5 percent. U.S. central bank Chairman Ben S. Bernanke will give a speech on economic policy at 1 p.m. in London today. “The ECB’s lagging behind the other global central banks in cutting rates and will certainly continue to exert downward pressure upon the euro,” Greg Salvaggio, vice president of capital markets in Washington at Tempus Consulting Inc., said in a Bloomberg Television interview. “We are very bullish on the dollar against the euro this year. We’re looking for a year-end target of $1.10.” German Stimulus Europe’s currency lost 6.9 percent against the yen, 5.3 percent against the dollar and 5.8 percent against the pound this year as reports showed services and manufacturing shrank in December by the most in at least a decade and inflation fell below the ECB’s ceiling of 2 percent for the first time since August 2007. S&P cited “significant challenges” facing the Spanish economy, which has been hit by the global credit crunch and the collapse of a debt-fueled domestic housing boom. The company said it would probably decide on the top AAA rating for the nation’s sovereign debt this month. German coalition parties agreed yesterday on a package of measures including about 36 billion euros in infrastructure investment and lower taxes. It is the country’s second stimulus program in two months. Not Enough “The latest German stimulus package probably won’t be enough to turn back the tide of euro selling,” said Kengo Suzuki, currency strategist at Shinko Securities Co. in Tokyo. “It will take time for these measures to kick in, and other European countries will need to join Germany and announce similar policies.” The euro may fall to $1.30 this week, he said. The dollar was supported after U.S. President-elect Barack Obama said yesterday he wants the second half of a $700 billion financial bailout fund available to him as “ammunition” in the event of an economic emergency and promised to direct more of the money to small businesses and homeowners. Obama, who takes office on Jan. 20, asked President George W. Bush to request the funds from Congress on his behalf after the outgoing president said he was willing to do so. Treasury Secretary Henry Paulson allocated most of the first $350 billion of the fund for buying stakes in banks, with other distributions for propping up Citigroup Inc., American International Group Inc. and automakers General Motors Corp. and Chrysler LLC. “Additional fiscal stimulus may support the dollar marginally,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “Expectations for the incoming Obama administration are very high. We have to be careful not to get too far ahead of ourselves.”

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