The euro snapped a five-day advance versus the yen before reports that economists say will show deteriorating consumer confidence in Germany and France. The 17-nation currency weakened against a majority of its most-traded counterparts before a summit of European leaders tomorrow to resolve the region’s debt crisis. The Dollar Index held onto a drop from yesterday after Federal Reserve Bank of New York President William C. Dudley said the central bank may do more to hold down borrowing costs. New Zealand’s currency fell against all major peers on data showing slowing inflation. “Europe’s debt crisis will take five to 10 years to resolve, so even if something comes out of tomorrow’s summit, it doesn’t mean all the problems will disappear all at once,” said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan’s third-biggest listed bank. “I’m bearish on the euro.” The euro sank 0.2 percent to 105.83 yen at 1:33 p.m. in Tokyo. The common currency slid 0.2 percent to $1.3905. The greenback was little changed at 76.11 yen. A gauge of French consumer confidence declined to 78 in October, the least since December 2008, according to economist estimates before today’s report from national statistics office Insee. GfK SE is expected to say today that its German consumer- confidence index will fall to 5.1 in November, the least since October last year, a separate survey showed. Recession Concerns “The euro zone will turn to a recession in 2012,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “Everybody is tightening their belts at the same time in Europe, so we can’t really be surprised by numbers that are pointing to recession.” German lawmakers are due to convene in Berlin today to begin scrutiny of two leveraging models for Europe’s bailout fund. The first would raise the European Financial Stability Facility’s capacity by insuring a fraction of countries’ funding requirements, a European Union document showed. The second combines capital from European and non-European public and private investors, according to the draft. The extent to which the fund is leveraged can only be ascertained after discussions with investors and rating companies, the document said. ‘Negative Surprise’ New Zealand’s dollar, known as the kiwi, lost 0.3 percent to 80.50 U.S. cents, snapping three days of gains. Consumer prices in the South Pacific nation increased 0.4 percent in the third quarter from the previous three months, when they rose 1 percent, Statistics New Zealand said today. “This is quite a negative surprise for the kiwi currency, and it’s quite a significant negative surprise to the Reserve Bank,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “It has a downward risk to their interest-rate track and interest rates in the short end should fall on this, which should weigh on the kiwi dollar.” The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against peers including the euro and yen, was little changed at 76.150 after a 0.2 percent drop yesterday. Dudley said yesterday that the Fed hasn’t “run out of bullets” and that it has additional stimulus options, including extending its commitment to keep interest rates low and embarking on a third round of asset purchases. “Once concern over Europe’s debt crisis recedes, the market focus will probably shift to whether the Fed will embark on another round of quantitative easing,” said Kengo Suzuki, manager of the foreign-bond department in Tokyo at Mizuho Securities Co. “The bias is for the dollar to be sold.” To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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