Euro Trades Near Month Low Before Europe Manufacturing, Services Reports

By Kristine Aquino and Masaki Kondo - Nov 23, 2011 8:26 AM GMT+0700

The euro traded 0.6 percent from a one-month low against the dollar before data forecast to show European manufacturing and services contracted amid the region’s sovereign-debt crisis.

The 17-nation euro was 0.7 percent from a six-week low versus the yen ahead of reports that economists predict will show purchasing managers’ indexes for manufacturing in Germany and France, Europe’s two biggest economies, also fell this month. The pound was 0.3 percent from a one-month low against the greenback before the Bank of England releases minutes of its November meeting today.

“The bias for the euro is that it falls,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “Overall the euro-zone economy is looking weak and trending weaker, and we’re expecting they’re going to recession sometime maybe next year.”

The shared currency was at $1.3511 as of 9:24 a.m. Singapore time from $1.3505 in New York yesterday. It reached $1.3422 on Nov. 17, the least since Oct. 10. The euro traded at 103.98 yen from 103.96 yen. It declined to 103.23 yen on Nov. 21, the lowest level since Oct. 10. The dollar was little changed at 76.96 yen.

The euro may fall toward $1.3150, Speizer said.

Japanese markets are shut today for a holiday, while markets in the U.S. will be closed tomorrow for Thanksgiving.

European Manufacturing

A preliminary reading of a euro-area composite index based on a survey of purchasing managers in manufacturing and services industries fell to 46.1 in November from 46.5 last month, according to the median estimate of economists surveyed by Bloomberg News. That would be the least since June 2009. Markit Economics will release the report today.

A manufacturing index in Germany fell to 48.5 this month, the least since July 2009, while a similar gauge in France dropped to 48 from 48.5 in October, according to two separate surveys. The preliminary figures will be released today. Readings above 50 indicate growth for all three measures.

Demand for the pound was limited by prospects the BOE will signal additional easing in meeting minutes scheduled for release today.

The minutes “will provide important indications about the likelihood of additional asset purchases by the BoE in coming months,” Valentin Marinov, a foreign-exchange strategist at Citigroup Inc. in London, wrote in a note to clients. “A partial confirmation that more asset purchases will come soon could be less supportive for sterling.”

BOE Easing

The Bank of England held the ceiling for asset purchases at 275 billion pounds ($430 billion) at its Nov. 10 meeting. The bank, which expanded so-called quantitative easing by 75 billion pounds last month, said the current purchases will take another three months to complete and the “scale of the program will be kept under review.”

The pound traded at $1.5636 from $1.5634 yesterday, when it fell to $1.5582, the weakest level since Oct. 12.

The pound has lost 3.8 percent over the past 12 months, the third-worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar declined 2.3 percent in the same period.

Figures from the Commerce Department today may show total bookings for U.S. durable goods declined 1.2 percent last month, according to a Bloomberg survey. That compares with a revised 0.6 percent decrease in September.

To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net