Bloomberg News

Euro Remains Lower Against Most Peers Before ECB Meets

September 04, 2012

The euro fell for second day before the European Central Bank meets tomorrow to discuss measures to tackle the debt crisis.

ECB President Mario Draghi told lawmakers in a closed-door session in Brussels this week the bank’s primary mandate compels it to intervene in bond markets to ensure the euro’s survival. The 17-nation currency remained lower versus most of its major counterparts before data forecast to show retail sales declined and services contracted in the euro area. The Australian dollar touched a six-week low before the government reports second- quarter gross domestic product today.

“A lot of expectations have been built into the ECB meeting since President Draghi’s comments,” said Yuki Sakasai, a currency strategist at Barclays Plc in New York. “There’s a risk of a disappointment, so the euro may face some downward pressure into the meeting.”

The euro fell 0.3 percent to $1.2532 as of 9 a.m. in Tokyo from yesterday when it declined 0.2 percent. It climbed to $1.2638 on Aug. 31, the strongest since July 2. The shared currency dropped 0.2 percent to 98.34 yen.

The yen fetched 78.48 per dollar from 78.43. Australia’s dollar slid 0.2 percent to $1.0205, the weakest level since July 25.

ECB Plan

Draghi told lawmakers in a closed-door session at the European Parliament in Brussels on Sept. 3 that the bank has lost control of borrowing costs in the monetary union, according to a recording of his comments obtained by Bloomberg News. The ECB announces its next policy decision tomorrow.

A final reading of an index based on a survey of purchasing managers in services industries in the euro area may confirm a drop to 47.5 in August from 47.9 a month earlier, below the 50 level which indicates contraction, according to the median estimate of economists surveyed by Bloomberg before Markit Economics releases its figures today. Economists in a separate Bloomberg poll predict a European Union statistics report today will show retail sales fell 1.7 percent in July from a year earlier.

The euro has dropped 4.2 percent this year, the worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen declined 2.8 percent, and the dollar weakened 0.6 percent.

Australia’s economy probably expanded 0.7 percent in the second quarter from the previous three-month period, when it grew 1.3 percent, according to the median estimate of economists in a Bloomberg survey before the data today.

To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net;

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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