The euro weakened for a third day against the dollar, the longest losing streak in almost a month, after data showed European manufacturing shrank and unemployment rose in Germany, adding to concern the debt crisis will worsen.
The 17-nation currency dropped to a two-week low versus the yen on speculation European Central Bank President Mario Draghi will signal tomorrow policy makers are moving closer to cutting interest rates to spur growth. The dollar erased gains against the yen after private data showed U.S. companies added fewer workers than forecast in April, boosting bets the Federal Reserve may keep accommodative monetary policy in place longer.
Draghi tomorrow may ‘begin to hint that the outlook for the European economy is clearly beginning to deteriorate again,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. “Within the next couple of months, the possibility of further rate cuts from the ECB is rising.”
The central bank will keep its benchmark interest rate at a record low 1 percent at tomorrow’s meeting in Barcelona, according to all 58 economists surveyed by Bloomberg News.
Orders to U.S. factories fell 1.5 percent in March, after a revised 1.1 percent gain in February, a Commerce Department report showed today.
While the Fed refrained at a two-day meeting last week from new actions to boost the economy, Chairman Ben S. Bernanke said it’s “prepared to do more” if necessary. The central bank bought $2.3 trillion of bonds in two rounds of quantitative easing from December 2008 to June 2011 to lower borrowing costs. The Dollar Index fell 14 percent during that period.