The dollar weakened against higher- yielding currencies before a U.S. report forecast to show manufacturing in the world’s largest economy accelerated this month, reducing demand for haven assets. The greenback fell the most versus Norway’s krone and South Africa’s rand among the 16 major currencies after Chinese factory output expanded and Japanese companies’ capital spending jumped by the most in almost five years, improving the global- growth outlook. The euro fell against the pound after the European Commission said Ireland needs more spending cuts to meet deficit targets. Federal Reserve Chairman Ben S. Bernanke said yesterday U.S. interest rates are likely to stay low. “Signs of economic recovery will benefit higher-yielding currencies at the expense of the dollar,� said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London. “At the same time, some are probably reassessing Bernanke’s comments yesterday and wonder if it’s too soon to rule out another round of quantitative easing.� The dollar fell 0.3 percent to 5.5750 krone at 10:28 a.m. in London, and weakened 0.5 percent to 7.4676 rand. The greenback dropped 0.2 percent to $1.3347 per euro and was little changed at 81.08 yen. The euro declined 0.1 percent to 83.66 U.K. pence and was little changed at 108.21 yen. The dollar was the worst performer among 10 developed nation currencies today, according to Bloomberg Correlation- Weighted Indexes, falling 0.2 percent. Factory Index The Institute for Supply Management’s U.S. factory index rose to an eight-month high of 54.5 in February from 54.1 in January, according to economists surveyed by Bloomberg News before today’s data. Readings above 50 signal growth. A separate report today will show U.S. personal spending increased 0.4 percent in January, another Bloomberg survey showed. The U.S. grew at a “modest to moderate pace� in January and early February, fueled by manufacturers, the Fed said yesterday in its Beige Book business survey. China’s purchasing managers’ index rose for a third month in February, to 51 from 50.5 in January, the statistics bureau and logistics federation said today. Japanese capital spending excluding software climbed 4.9 percent last quarter from a year earlier, after declining 11 percent in the previous three months, the Finance Ministry said in Tokyo. Dollar Index The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, fell 0.1 percent to 78.765. The gauge slid to 78.095 yesterday, the lowest since Dec. 2. Central bank rates are 1.75 percent in Norway and 5.5 percent in South Africa compared with the U.S. benchmark of between zero and 0.25 percent. The euro fell for a fifth day versus the pound after a second round of loans from the European Central Bank yesterday failed to bring down Portuguese bond yields. The 17-nation currency weakened earlier against the dollar as documents supplied to German lawmakers showed the European Commission urged Ireland to reassess its deficit forecasts later this year. The ECB allotted 529.5 billion euros in loans to euro-area banks yesterday. “The euro is under pressure despite the successful liquidity operation by the ECB as the market judges that the contagion risk is still very much alive,� said Jane Foley, a senior currency strategist at Rabobank International in London. “The fact that Portuguese yields keep rising despite the ECB measures fuels speculation it might need a second bailout. It showed these measures just papered over the cracks.� European Union leaders will meet in Brussels today to discuss the regional debt crisis. The euro remained little changed against the dollar and yen after a report showed unemployment in the euro area climbed to 10.7 percent in January, the highest level since 1997. To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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