Dollar Trades Near 2-Week Low; Report May Show Growth in Europe

Nov. 12 (Bloomberg) -- The dollar traded near a two-week low against the euro before a report tomorrow forecast to show Europe’s economy expanded last quarter, damping demand for the U.S. currency as a refuge.

The yen weakened versus 11 of 16 major counterparts as Asian stocks extended a global rally, encouraging investors to buy higher-yielding assets. Australia’s dollar surged to a 15- month high after jobs unexpectedly gained in October

“Good economic data will keep weighing on the dollar,” said Takeshi Tokita, vice president of foreign-exchange sales at Mizuho Corporate Bank Ltd. in Tokyo. “The dollar is firmly in a downtrend.”

The U.S. currency fell to $1.5014 per euro at 9:40 a.m. in Tokyo from $1.4987 in New York yesterday, when it touched $1.5048, the lowest level since Oct. 26. The dollar bought 89.87 yen from 89.87 yen, and was at $1.6616 per pound from $1.6574.

The yen weakened to 134.88 per euro from 134.69 in New York yesterday. The Australian dollar surged 0.6 percent to 93.57 U.S. cents, the highest level since August 2008.

Gross domestic product in the 16-nation euro region expanded 0.5 percent in the third quarter from the second quarter, when it fell 0.2 percent, a Bloomberg News survey of economists showed. The European Union’s statistics office in Luxembourg will release the report tomorrow.

Stocks Advance

The European Central Bank has kept its benchmark interest rate at 1 percent since May and is lending banks unlimited cash for periods of up to a year to haul Europe out of the recession. President Jean-Claude Trichet signaled on Nov. 5 that the ECB’s December offer of 12-month loans to banks will be the last.

The yen declined as Asian stocks gained. The Nikkei 225 Stock Average rose 0.4 percent and the MSCI Asia-Pacific excluding Japan Index climbed 0.3 percent after the Standard & Poor’s 500 Index added 0.5 percent yesterday.

The euro-yen had a correlation of 0.79 with the MSCI Asia- Pacific excluding Japan index in the past year, according to data compiled by Bloomberg. A reading of 1 would mean the two moved in lockstep.

“As long as stocks remain strong, there’s no reason to buy the yen,” said Satoshi Okagawa, head of the foreign-exchange forward trading group at Sumitomo Mitsui Banking Corp. in Tokyo. “Higher-yielding currencies will continue to be bought.”

Australia Jobs

Benchmark rates of 0.1 percent in Japan and as low as zero in the U.S. compare with 3.50 percent in Australia and 2.5 percent in New Zealand, attracting investors to the South Pacific nations’ assets. The risk in such trades is that currency market moves will erase profits.

The number of Australians employed rose 24,500 in October from the previous month, the statistics bureau said in Sydney today. The median estimate of 20 economists surveyed by Bloomberg was for a decline of 10,000. The jobless rose to 5.8 percent from 5.7 percent.