The dollar weakened against most major peers on speculation reports this week pointing to a faltering U.S. economy will spur the central bank to consider more asset purchases, or quantitative easing, to support growth. The dollar slid versus the euro before Federal Reserve policy makers conclude a two-day meeting today. The 17-nation euro reversed earlier losses after Greece’s Cabinet backed Prime Minister George Papandreou’s plan to put a bailout package to a referendum and before the region’s leaders meet to stem the debt crisis. The yen gained against most peers as a slump in stocks boosted demand for the currency as a refuge. Poor U.S. data “would contribute to risk aversion, which could be dollar supportive, but I think probably the more significant reaction would be the markets will see the data as a trigger for more QE,” said Mitul Kotecha, head of global currency strategy in Hong Kong at Credit Agricole CIB. “On that basis, I think the only safe haven will be the yen, and the dollar will end up coming under some pressure.” The dollar lost 0.2 percent to $1.3731 per euro as of 7:06 a.m. in London from in New York. The currency slid 0.3 percent to 78.13 yen. The euro was at 107.31 yen from 107.39 yen yesterday. The MSCI Asia Pacific Index of stocks slid 0.8 percent, extending a global decline in equities. Figures tomorrow will show U.S. factory orders in September declined 0.2 percent after dropping by the same amount in August, economists said in a Bloomberg News survey. The Institute for Supply Management’s factory index dropped to 50.8 last month from 51.6 in September, data showed yesterday. The median forecast of economists was 52, with 50 being the dividing line between growth and contraction. Unanimous Backing The euro reversed an earlier decline versus the dollar after a Greek official told reporters that the Cabinet gave Papandreou unanimous backing for his referendum plans. Government spokesman Elias Mosialos said the referendum will be held “as soon as possible,” and vote of confidence in Parliament is also scheduled to begin today and to conclude at the week’s end. “Initially there was some selling because there were some concerns of a division between the Cabinet and the Greek government,” said Lee Wai Tuck, a currency strategist in Singapore at Forecast Pte. “But when they said they unanimously back the referendum, there was some buying back of the euro.” Papandreou will travel to Cannes, France today to brief German Chancellor Angela Merkel, French President Nicolas Sarkozy, European Central Bank President Mario Draghi and other officials on developments in Greece. Group of 20 leaders will also meet in the French city tomorrow to discuss the debt crisis. “This buying, I suppose, is just some covering back of positions ahead of the meeting,” Lee said. “Overall, I think euro is still pretty heavy. It’s still a sell on rallies market.” To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@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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