BLBG: Euro Falls as Drop in U.S. Retail Sales Fans Recession Concern
The euro declined to a five-week low against the dollar as a drop in U.S. retail sales increased concern that the global recession is deepening and as the European Central Bank is forecast to cut interest rates.
The euro fell for a fourth day before the ECB is forecast to cut rates by 0.5 percentage points at a meeting tomorrow. The Russian ruble fell to lowest in six years against the dollar after the central bank devalued the currency for the third time in four days and the government’s dispute with Ukraine over gas shipments remained unresolved.
“The market is focusing on banks again,” said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. “The situation in Europe is a concern. The euro may fall further.”
The euro weakened 0.4 percent to $1.3126 per euro at 8:44 a.m. in New York, from $1.3182 yesterday, when it touched $1.3141, the strongest since Dec. 11. The dollar bought 89.26 yen from 89.38 yen. The euro traded at 117.13 yen from 117.81 yen. The British pound rose to $1.4505 from $1.4501.
December sales at U.S. retailers fell more than twice as much as forecast as rising unemployment caused consumers to retrench. The 2.7 percent decrease, the sixth consecutive drop, extended the longest string of declines on record, the Commerce Department said today in Washington. Purchases excluding automobiles slumped 3.1 percent, the most since records began in 1992.
Russian Ruble
The ruble fell to as low as 31.756 per dollar today, the weakest since February 2003. The ruble has dropped 26 percent since August. Bank Rossii, which manages the ruble against a target&cls; dollar&cle;-euro basket to protect exporters from fluctuations, expanded the trading range today, a bank official said, without providing details.
Deutsche Bank AG, reported a record loss of about 4.8 billion euros ($6.3 billion) in the fourth quarter after the worst financial crisis since the Great Depression pummeled debt and equity trading. HSBC Holdings Plc tumbled 7.9 percent as Morgan Stanley said Europe’s largest bank by market value may have to raise as much as $30 billion and halve its dividend.
