Dollar Rises Versus Euro as Slow Recovery Curbs Risk Appetite

Sept. 25 (Bloomberg) -- The dollar advanced for a third-day against the euro, the longest strength of gains in a month, as signs of a slow recovery from the recession reduced demand for higher-yielding assets funded in the greenback.

The dollar headed for its first weekly advance in three weeks against the 16-nation currency before a report forecast to show that growth in U.S. durable goods orders slowed last month. The pound reached the lowest in more than three months against the dollar after the Newcastle Journal reported that Bank of England Governor Mervyn King said the pound’s drop is “very helpful” in rebalancing the U.K. economy.

“The market priced in prospects of a global recovery too much and too fast,” said Daisaku Ueno, chief analyst at Gaitame.Com Research Institute Ltd., a unit of Japan’s largest currency margin company. “The sustainability of gains for higher-yielding currencies at the expense of the dollar may be called into question.”

The dollar traded at $1.4655 per euro at 9:07 a.m. in Tokyo from $1.4666 yesterday in New York. The U.S. currency touched $1.4844 on Sept. 23, the weakest since Sept. 22, 2008. The dollar was at 90.90 yen from 91.27 yen. The yen fetched 133.24 per euro from 133.86 yesterday.

The pound fell to $1.5918, the lowest since June 8, from $1.6059 yesterday in New York. The U.K. currency dropped to 91.93 pence per euro, reaching the weakest level since April 1.

Orders for durable goods in the U.S. meant to last several years increased 0.4 percent in August, after rising 5.1 percent the previous month, according to the median forecast of 75 economists surveyed by Bloomberg News. The Commerce Department’s report is due for release at 8:30 a.m. in Washington.

Adding to signs of a slow recovery, the National Association of Realtors reported yesterday that purchases of existing U.S. homes decreased 2.7 percent in August to a 5.10 million annual pace.

G-20 Meeting

The U.S. currency rose against 15 out of its 16 most-active counterparts after Treasury Secretary Timothy Geithner said the U.S. has a “special responsibility” to support the dollar’s role as the world’s reserve currency, spurring speculation that Group of 20 leaders will discuss the falling greenback.

“A strong dollar is very important in the United States,” Geithner said in response to a question at a press conference yesterday in Pittsburgh, where the G-20 nations started two days of talks.

His comments came after German Chancellor Angela Merkel told reporters in Berlin yesterday that G-20 leaders would discuss exchange rates at the summit in Pittsburgh, which ends today. The G-20 is composed of the leading industrial and developing economies, accounting for about 85 percent of the global economy.