The euro fell from near a one-week high against the dollar after European reports showed services and manufacturing output contracted and inflation slowed.
The 17-nation currency dropped toward an 11-year low against the yen as stocks declined amid concern the sovereign- debt crisis is slowing the region’s growth. The Hungarian forint weakened to a record low against the euro on speculation talks between the government and the European Union over financial aid will be delayed.
The euro fell 0.3 percent to $1.3016 at 6:08 a.m. in New York after rising to $1.3077 yesterday, the highest level since Dec. 28. The common currency slipped 0.4 percent to 99.77 yen. It fell to 98.66 yen on Jan. 2, the weakest since December 2000. The dollar was little changed at 76.65 yen.
London-based Markit Economics said today a euro-area composite index (ECPMICOU) based on a survey of purchasing managers was 48.3 in December compared with 47 in November. The gauge stayed below the 50 level that delineates contraction and expansion for a fourth month.
European inflation (ECCPEST) slowed from the fastest in three years in December, a separate report today showed. The inflation rate in the euro area fell to 2.8 percent in December from 3 percent in the prior month, the European Union statistics office said.
The Stoxx Europe 600 Index of shares fell 0.3 percent.
‘Orderly Depreciation’
“The underlying problems are going to remain and will likely generate an orderly depreciation of euro,” said Richard Grace, the chief currency strategist and head of international economics at Commonwealth Bank of Australia in Sydney.
The currency will fall to $1.27 by June, Grace said. The euro will decline to $1.28 by the second quarter, according to the median forecast of analysts surveyed by Bloomberg.
The forint dropped for a second day against the euro on concern a resumption in talks with the International Monetary Fund and the EU on financial assistance will be delayed.
Hungary, the EU’s most-indebted eastern member, received its second sovereign-credit downgrade to junk last month when Standard & Poor’s followed Moody’s Investors Service in taking the country out of its investment-grade category on Dec. 21.
“There is an increased likelihood that the IMF deal will not happen before the second half of 2012,” Eszter Gargyan, a Budapest-based economist at Citigroup Inc., wrote in a research report today. A delay in the IMF talks may necessitate rate increases of as much as 300 basis points from the current 7 percent rate to defend the forint, Gargyan said.
The forint dropped 1.1 percent to 319.63 per euro after falling to a record 319.92.
To contact the reporters on this story: Keith Jenkins in London at kjenkins3@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
