Dollar Near Nine-Month Low Against Euro Before Chinese Reports

Sept. 11 (Bloomberg) -- The dollar traded near a nine-month low against the euro on speculation reports today will show China’s factory output gained and exports dropped at a slower pace, reducing demand for the U.S. currency as a refuge.

The euro may approach a two-week high against the yen before an Italian report today that economists said will show industrial production rose in July after dropping in June, adding to signs Europe’s recession is easing. The pound was near a one-month high against the dollar after the Bank of England yesterday kept its bond-buying program unchanged in a sign policy makers believe the economy is recovering.

“Assuming China’s data will come out stronger than expected, that’s going to keep the U.S. dollar under pressure across the board,” said Sue Trinh, senior currency strategist at RBC Capital Markets in Sydney. “Risk appetite should be pretty well underpinned.”

The dollar traded at $1.4578 per euro as of 9:10 a.m. in Tokyo from $1.4582 yesterday in New York, when it dropped to $1.4613, the weakest level since Dec. 18. The euro was little changed at 133.64 yen from 133.76 yen. The dollar was at 91.67 yen from 91.73 yesterday when it fell to 91.44 yen, the lowest level since Feb. 16.

Sterling traded at $1.6652 from $1.6651 yesterday, when it climbed to $1.6687, the strongest level since Aug. 10. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, was at 76.819 from 76.827 yesterday.

Demand for the dollar may decline as economists surveyed by Bloomberg News said China’s industrial production gained 11.8 percent in August from a year earlier. The statistics bureau will release the report at 10 a.m. in Beijing.

China’s Exports

China’s exports may have dropped 19 percent in August from a year earlier, the slowest decline since March, a separate Bloomberg survey showed before today’s report.

The Bank of England’s nine-member Monetary Policy Committee decided to keep buying as much as 175 billion pounds ($291 billion) of assets to help the economy’s recovery. Policy makers also kept the main rate at a record low of 0.5 percent.

“The market was concerned that the BOE may introduce additional asset purchases,” said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. “The BOE did nothing. There’s a window of opportunity for the pound to pick up some ground in the next two months.”

The euro add to gains as the national statistics office in Rome is forecast to report today that industrial production in Italy gained 0.4 percent in July after declining 1.2 percent in June, according to a Bloomberg survey.

The yen was little changed after a government report today showed Japan’s economy grew less than initially estimated in the second quarter.

Gross domestic product expanded at an annual 2.3 percent pace in the three months ended June 30, according to revised figures from the Cabinet Office in Tokyo. Economists surveyed by Bloomberg News forecast a 3.7 percent expansion, unchanged from the preliminary report.