The euro strengthened for a second day against the dollar and yen after Spain sold its maximum target of debt at a bond auction today. The Dollar Index (DXY) fell for a fourth day before U.S. reports forecast to show manufacturing and employment in the world’s largest economy improved, damping demand for the relative safety of the greenback. Australia’s dollar weakened after government data showed building approvals declined and consumer spending slowed, fueling speculation the central bank will reduce interest rates. The euro gained 0.3 percent to $1.3490 at 9:56 a.m. in London after surging 1 percent yesterday, the biggest gain since Nov. 11. The shared currency rose 0.4 percent to 104.78 yen. The yen was little changed at 77.68 per dollar. IntercontinentalExchange Inc.’s Dollar Index, which tracks the U.S. currency against those of six major U.S. trading partners, fell 0.3 percent to 78.195. Spain sold 3.75 billion euros of bonds at the auction, the central bank said, meeting the maximum target for the sale. The average yield on the five-year bonds due January 2017 was 5.544 percent, compared with 4.848 percent when notes with a similar maturity were auctioned on Nov. 3. The April 2015 bond yielded an average 5.187 percent, compared with 3.639 percent the last time it was auctioned on Oct. 6. France will today sell bonds maturing in 2017, 2021, 2026 and 2041. Manufacturing Shrinks The euro gained even after a report showed Europe’s manufacturing industry contracted in November as the region edged toward recession and global demand weakened. A manufacturing gauge based on a survey of purchasing managers in the 17-nation euro region dropped to 46.4 from 47.1 in October, London-based Markit Economics said. That’s in line with an initial estimate published on Nov. 23. A reading below 50 indicates contraction. Australia’s dollar fell against all its major counterparts after the statistics bureau said the number of permits granted to build or renovate houses and apartments declined 10.7 percent in October after dropping 14.2 percent the previous month. Growth in retail sales slowed to 0.2 percent from 0.4 percent. The Australian currency weakened 0.7 percent to $1.0214, and slid 0.6 percent to 79.38 yen. To contact the reporters on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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