BLBG:Euro Touches 2-Week Low Before Retail Sales, Sentiment
The euro fell to the lowest level in almost two weeks as political uncertainty and weakening economic data in the currency bloc underscored the deepening impact of the debt crisis.
The 17-nation euro also reached a two-week low versus the yen before reports that may show declines in Italian retail sales and European consumer confidence. The yen was 0.1 percent from a more than one-week high versus the dollar amid losses in Asian equities as Spanish Prime Minister Mariano Rajoy faces calls for early elections and a possible international rescue of his nation. New Zealand’s currency fell after the nation’s trade deficit widened. Singapore’s dollar weakened after industrial production unexpectedly dropped.
“Recent data suggest that the European economy is likely to remain weak for a long time,” said Hitoshi Asaoka, a senior strategist at Mizuho Trust & Banking Co. in Tokyo. “We’re not sure whether Spain is really going to ask for bailout, weighing on the euro.”
The euro fell 0.2 percent to $1.2868 at 7:05 a.m. in London after earlier touching $1.2862, the least since Sept. 13. It dropped to as low as 99.97 yen, also the weakest since Sept. 13, before trading at 99.98, 0.4 percent below the close in New York. The yen added 0.1 percent to 77.72 per dollar. It reached 77.66 yesterday, the strongest since Sept. 14.
The MSCI Asia Pacific Index of shares dropped 1.2 percent.
Retail, Confidence
In Italy, retail sales probably fell 0.8 percent in July from a year ago, a Bloomberg News poll of economists showed before today’s report. That compares with a 0.5 percent drop in June and would be the fourth-straight decline. The nation is scheduled to sell 9 billion euros ($11.6 billion) of six-month bills today after the 10-year yield climbed five basis points to 5.1 percent yesterday, the highest since Sept. 17.
A final reading of a consumer confidence index in the euro area will probably confirm the gauge dropped to minus 25.9 this month, the lowest since May 2009, according to a separate survey. The European Commission will publish the data tomorrow.
Spain pledged to meet its budget goals even as data released yesterday showed government spending through August rose from a year ago and tax receipts fell. Meanwhile, Catalan President Artur Mas called early elections for Nov. 25, saying the time has come for Spain’s richest region to seek “self- determination.”
Mas’s call comes as Rajoy struggles to gain acceptance for austerity measures and stokes frustration in Germany over his foot-dragging on whether to seek a bailout.
Euro Cloud
Europe’s shared currency may slide to 97.76 yen, a level where the two leading lines meet on its daily ichimoku chart, as early as Oct. 8, before dropping below the so-called cloud and sliding to below 94.12, said Daisuke Uno, chief strategist in Tokyo at a unit of Sumitomo Mitsui Financial Group Inc. (8316)
The 97.76 level was last seen on Aug. 20, when the euro slid to as low as 97.74 yen. The 94.12 figure, last reached on July 24, would be the weakest since November 2000, according to data compiled by Bloomberg.
Ichimoku charts are used to predict a currency’s direction by analyzing the midpoints of historical highs and lows. The cloud refers to the area between the first and second leading span lines on the chart and is used to show an area where trading orders may be clustered.
The euro weakened 3.5 percent in the past six months, the worst performance after the Swiss franc among the 10 developed- nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen was the biggest gainer, rising 7.8 percent. The dollar added 0.5 percent.
Japan Opposition
Former Japanese Prime Minister Shinzo Abe was elected leader of the opposition Liberal Democratic Party in a runoff vote today in Tokyo. His victory means Abe is likely to challenge current Prime Minister Yoshihiko Noda in elections that must be called by August. Polls indicate the LDP may win, putting Abe in line to become premier for a second time.
Abe has called for building on islands at the heart of an escalating territorial dispute with China that is threatening trade between Asia’s two biggest economies. He also favors having the Bank of Japan (8301) adopt an inflation target of 3 percent to combat more than a decade of falling prices.
In New Zealand, a statistics bureau report released today showed the nation’s trade shortfall in the 12 months through August was NZ$866 million ($710 million), compared with economist forecasts for a NZ$760 million gap and a revised NZ$768 million deficit in the year ended July 31.
The New Zealand dollar, nicknamed the kiwi, fell 0.2 percent to 81.99 U.S. cents.
Singapore’s currency touched the weakest level in two weeks versus its U.S. counterpart after a report that showed industrial production unexpectedly declined in August from a year earlier. The Singapore dollar dropped 0.2 percent to S$1.2312 after earlier weakening to as much as S$1.2319, the least since Sept. 11.
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
