BLBG:Euro Weakens Amid Signs Debt Crisis Is Weighing on Growth; Aussie Declines
The euro declined for the sixth time in eight days against the dollar before data that may add to signs that Europe’s debt crisis is damping economic growth.
The 17-nation euro dropped versus the yen ahead of reports forecast to show that manufacturing in Germany and France, Europe’s two biggest economies, fell this month. The pound was 0.2 percent from a month low against the dollar before the Bank of England releases its November meeting minutes. The U.S. currency advanced against 15 of its 16 major peers as Asian stocks dropped. Australia’s dollar slid after a preliminary reading of a Chinese industrial output gauge declined.
“The bias for the euro is that it falls,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “Overall the euro-zone economy is looking weak and trending weaker, and we’re expecting they’re going to recession sometime maybe next year.”
Europe’s shared currency lost 0.3 percent to $1.3471 as of 11:34 a.m. Singapore time from $1.3505 in New York yesterday. The euro fell 0.2 percent to 103.75 yen. The dollar was at 77.01 yen from 76.97 yen.
The euro may fall toward $1.3150, Speizer said.
The MSCI Asia Pacific Excluding Japan Index (MXAPJ) fell 1.7 percent. Japanese markets are shut today for a holiday, while markets in the U.S. will be closed tomorrow for Thanksgiving.
A preliminary reading of a euro-area composite index based on a survey of purchasing managers in manufacturing and services industries fell to 46.1 in November from 46.5 last month, according to the median estimate of economists surveyed by Bloomberg News. That would be the least since June 2009. Markit Economics will release the report today.
European Manufacturing
A manufacturing index in Germany fell to 48.5 this month, the least since July 2009, while a similar gauge in France dropped to 48 from 48.5 in October, according to two separate surveys. The advance figures for all three measures will be released today and readings below 50 indicate contraction.
Demand for the pound was limited by prospects the Bank of England will signal additional easing in meeting minutes scheduled for release today.
The minutes “will provide important indications about the likelihood of additional asset purchases by the BoE in coming months,” Valentin Marinov, a foreign-exchange strategist at Citigroup Inc. in London, wrote in a note to clients. “A partial confirmation that more asset purchases will come soon could be less supportive for sterling.”
BOE Easing
The Bank of England held the ceiling for asset purchases at 275 billion pounds ($429.4 billion) at its Nov. 10 meeting. The bank, which expanded so-called quantitative easing by 75 billion pounds last month, said the current purchases will take another three months to complete and the “scale of the program will be kept under review.”
The pound dropped 0.1 percent to $1.5613 from yesterday, when it fell to $1.5582, the weakest level since Oct. 12.
The pound has lost 3.6 percent over the past 12 months, the third-worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.
The Australian dollar extended declines against the greenback after the HSBC Flash Manufacturing PMI for China, Australia’s biggest trading partner, fell to 48 this month, predicting the biggest contraction in three years. That compares with a final reading of 51 in October.
’Massive Uncertainty’
“We’ve still got massive uncertainty about what’s happening in Europe and growing concerns about the nature of the growth profile for China,” said Tim Riddell, head of global markets research at Australia & New Zealand Banking Group Ltd. in Singapore. “In that backdrop, the likes of Aussie and kiwi will remain under pressure as markets reassess global demand” for commodities.
Demand for the dollar also increased ahead of U.S. data due today that may add to signs the world’s biggest economy is weathering the global slowdown.
The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 64.5 this month, the highest since June, while personal spending climbed for a fourth month in October, Bloomberg surveys of economists indicated.
“The solid profile of the U.S. economy is helping it be the last resort currency at the moment,” ANZ’s Riddell said. “That’s providing a further shoring up of the U.S. dollar.”
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
