Dollar Weakens Before Report Forecast to Show Growth in Europe

Nov. 13 (Bloomberg) -- The dollar fell against higher- yielding currencies before a report today that may show Europe’s economy expanded for the first time in six quarters, damping demand for the greenback as a refuge.

The yen was poised to advance against the dollar on speculation Japanese investors will bring home earnings on overseas assets. Losses in the dollar may be limited on speculation investors will trim bets before the end of this year that the U.S. currency will weaken further.

“If the GDP data are as good as expected or better, it will boost demand for the euro,” said Takako Masai, general manager of capital markets division at Shinsei Bank Ltd. in Tokyo. “Overall, the dollar remains under selling pressure. That’s not going to change soon.”

The Norwegian krone rose to 5.6517 per greenback as of 9:24 a.m. in Tokyo from 5.6658 yesterday in New York. The Australian currency gained to 92.60 U.S. cents from 92.35 cents. The dollar traded at $1.4862 per euro from $1.4850, when it rose as much as 1.1 percent. This week, the dollar has dropped against 13 of the 16 most-traded currencies.

The yen was at 90.23 per dollar from 90.37, and traded at 134.11 per euro from 134.21. Japan’s currency has dropped 0.5 percent versus the dollar and the euro this week.

Economists in a Bloomberg News survey predict gross domestic product in the 16-nation euro region expanded 0.5 percent in the third quarter from the second, when it contracted 0.2 percent. The European Union’s statistics office in Luxembourg will release the data today.

Futures Traders

Futures traders reduced bets the dollar will fall against seven currencies including the euro, according to data from the Washington-based Commodity Futures Trading Commission. The difference in the number of wagers by hedge funds and other large speculators on a decline in the U.S. currency compared with those on a gain -- so-called net shorts -- was 175,462 on Nov. 3, compared with net shorts of 191,950 a week earlier.

The U.S. will make $100.5 billion in redemption and coupon payments for Treasuries on Nov. 16, according to estimates by Stone & McCarthy Research Associates in Princeton, New Jersey.

“It’s likely that Japanese investors will repatriate some of those payments,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s biggest currency broker. “It’s a yen-buying factor.”

Japan held $731 billion in U.S. government debt as of August, the second-largest holder after China, which had $797 billion, according to Treasury Department data.