The euro weakened against the dollar, snapping a two-day gain, on speculation interest-rate increases in the 17-member euro-area will end as the region’s sovereign debt crisis curbs economic growth. The shared currency declined versus 12 of its 16 major peers after European Central Bank President Jean-Claude Trichet said yesterday the bank is reviewing its assessment of inflation risks as economic growth slows. The Swiss franc and the yen rose versus most major currencies before U.S. reports today that economists said will show home prices and consumer confidence fell, spurring demand for assets considered safer investments. “The comments by Trichet suggesting that the ECB might revise its inflation outlook could signal an end to the rate hiking cycle,” said Lutz Karpowitz, a foreign-exchange strategist at Commerzbank AG in Frankfurt. “That’s causing a reluctance to push euro-dollar higher.” The euro dropped 0.3 percent to $1.4469 as of 9:19 a.m. in London. The franc gained 0.5 percent to 1.1776 per euro after falling to 1.1973 yesterday, the weakest level since July 11. The yen advanced 0.4 percent to 111.10 per euro, and gained 0.1 percent to 76.77 per dollar. “Risks to the medium-term outlook for price developments are under study in the context of the ECB staff projections that will be released early September,” Trichet told the European Parliament’s economic committee in Brussels. The comment contrasts with his last policy statement on Aug. 4, when he said risks to the inflation outlook were “on the upside.” Home Values The S&P/Case-Shiller index of home values in 20 U.S. cities fell 4.6 percent from June 2010, the biggest 12-month decrease since November 2009, according to the median forecast of economists surveyed by Bloomberg before today’s data. A separate report today will show consumer confidence fell to a 10-month low in August, another survey projects. “Not much has changed, it’s still a bearish economic environment,” said Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in London. “Traders are still hesitant to move out of ranges.” Stocks rallied from Asia to Europe on speculation the global economy will recover after reports yesterday showed U.S. consumer spending and car sales increased. Federal Reserve Chairman Ben S. Bernanke said last week that the U.S. economy is gradually recovering and he has the tools to spur further growth if needed. The Fed chairman has scheduled an extra day for the next policy meeting in September to “allow a fuller discussion” of the economy and the Fed’s possible response. Gross domestic product in India increased 7.7 percent in the second quarter from a year earlier, the Central Statistical Office said today, more than the 7.6 percent gain predicted in a Bloomberg News survey of economists. An index of China’s manufacturing activity rose to 51 in August from 50.7 the previous month, economists forecast before the Purchasing Managers’ report on Sept. 1. To contact the reporter on this story: Garth Theunissen in London gtheunissen@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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