The euro was within 0.5 percent of a seven-week high versus the dollar before the European Central Bank’s latest policy decision and as investors await data economists said will confirm the region is in recession. The common currency was little changed against the yen after Standard & Poor’s downgraded Greece’s credit rating to selective default. ECB President Mario Draghi will keep the main interest rate at 0.75 percent, according to 56 of 61 economists in a Bloomberg survey. He will explain the decision in a press conference after the announcement. The New Zealand dollar touched a one-month high versus the U.S. dollar after the nation’s Reserve Bank kept interest rates steady. “Clearly the euro-area economy is weak but at the moment the weakness is fairly contained,� said Chris Turner, head of currency strategy at ING Groep NV in London. “A cut in the ECB refinancing rate would be a surprise today, but if it were to happen it would be the catalyst to take the euro briefly lower. I don’t think a 25 basis-point move would make much difference at this stage.� The shared currency was little changed at $1.3067 at 9:04 a.m. London time after reaching $1.3127 yesterday, the highest since Oct. 18. The euro bought 107.75 yen. The Japanese currency was also little changed at 82.47 per dollar, after weakening 0.7 percent to 82.47 yesterday. European Economy Gross domestic product in the euro area slipped 0.1 percent in the third quarter from the previous three-month period, according to the median estimate of economists surveyed by Bloomberg News. That would confirm data from last month showing the bloc fell into recession for the second time in four years. Greece was cut to SD, or selective default, from CCC, S&P said on its website yesterday. The nation has offered to spend 10 billion euros to buy back bonds issued earlier this year in an attempt to reduce a debt load that may threaten future international aid. Unemployment in France, Europe’s second-biggest economy, climbed to a 13-year high in the third quarter. The jobless rate rose to 10.3 percent from 10.2 percent in the previous three- month period according to International Labour Organization standards, Insee, the national statistics office, said in an e- mailed statement today. “The data is clearly suggesting that the ECB is going to have to do something more,� said Ray Attrill, Sydney-based global co-head of currency strategy at National Australia Bank Ltd. “We could get some kind of a hint that rates could be cut at a future meeting. If we get any soundings in that direction from Draghi today, then that could put a little bit of pressure on the euro.� ‘Decisive Action’ The euro has fallen 1.8 percent this year, according to Bloomberg Correlation-Weighted Indexes. The yen’s 9.9 percent drop is the biggest decline among the 10 developed-nation currencies tracked by the gauge. The dollar lost 2.7 percent. The Bank of Japan (8301) is ready to take “appropriate and decisive action� if risks to its outlook become significant, Deputy Governor Kiyohiko Nishimura said in a speech yesterday before the central bank sets policy on Dec. 20. Japan’s opposition Liberal Democratic Party leader Shinzo Abe, favored to win a Dec. 16 election according to opinion polls, has called for more monetary stimulus to reach 2 percent inflation. The central bank’s target is currently 1 percent. BOJ Pressure “Government pressure on the BOJ to ease will increase,� said Greg Gibbs, Singapore-based senior currency strategist at Royal Bank of Scotland Group Plc. “If there’s any currency out there that you have to assume is at risk of a major change toward a weaker trend next year, it’s the yen.� The Reserve Bank of New Zealand left its official cash rate unchanged at 2.5 percent, in line with the estimates of 16 economists in a Bloomberg survey. “The overall outlook is for stronger domestic demand and the elimination of current excess capacity by the end of next year,� central bank Governor Graeme Wheeler said in a statement today in Wellington. “This is expected to cause inflation to rise gradually toward the 2 percent target midpoint.� New Zealand’s dollar was little changed at 82.96 U.S. cents after advancing to 83.07, the most since Nov. 7. The so-called kiwi was little changed at 68.40 yen, after touching 68.52, the strongest since March 27. To contact the reporters on this story: Mariko Ishikawa in �京 at mishikawa9@bloomberg.net; Neal Armstrong in London at narmstrong8@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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