By Masaki Kondo and Monami Yui - Dec 12, 2011 8:01 AM GMT+0700
Dec. 12 (Bloomberg) -- Russell Jones, global head of fixed-income strategy at Westpac Banking Corp., talks about Europe's sovereign debt crisis. Germany’s top central banker cooled speculation that the European Central Bank will extend its role as European leaders pressed their case that a new fiscal accord will deliver the region from its two-year-old debt crisis. Jones speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
The euro fell against the dollar before a German report tomorrow that economists say will show investor confidence in the region’s largest economy slid to a three-year low.
The 17-nation currency was 0.5 percent from a one-month low against the pound as Italy and France prepare to sell bills amid concern the euro-area’s debt crisis is spreading to bigger nations. Demand for the yen and dollar was limited as Asian stocks extended a global rally and before a U.S. report tomorrow projected to show retail sales rose in November, reducing the allure of lower-yielding, haven currencies.
“The euro is likely to fall gradually,” said Kengo Suzuki, manager of the foreign-bond department in Tokyo at Mizuho Securities Co., a unit of Japan’s third-biggest listed bank by market value. “The outlook for the European economy remains weak.”
The euro lost 0.2 percent to $1.3356 as of 9:59 a.m. in Tokyo from the close in New York on Dec. 9. The common currency was little changed at 85.39 pence after falling to 84.96 on Dec. 8, the lowest since Nov. 10. The yen traded at 103.71 per euro from 103.89 on Dec. 9 and was unchanged at 77.65 per dollar.
The ZEW Center for European Economic Research may say its index of investor and analyst expectations, which aims to predict developments six months in advance, declined to minus 55.8 in December, the lowest since October 2008, according to a Bloomberg News survey of economists.
Bill Auctions
Italy will sell 7 billion euros ($9.4 billion) of 365-day bills today, while France is scheduled to auction 6.5 billion euros of short-term debt.
European Union leaders committed “to establishing a new fiscal rule,” which curbs a nation’s annual structural deficit below 0.5 percent of nominal gross domestic product, according to a statement from the European Council released on Dec. 9 after a summit in Brussels.
“While the fiscal compact is a step in the right direction, it’s not aimed at addressing the immediate issue of the sovereign debt crisis which is threatening to plunge the euro-zone into a deep recession and potentially lead to the break of the euro,” John Kyriakopoulos, Sydney-based head of currency strategy at National Australia Bank Ltd., wrote in a research note today.
U.S. Economy
U.S. retail sales probably increased 0.6 percent last month after a 0.5 percent gain in October, a Bloomberg poll of economists indicates. The Commerce Department data is due tomorrow.
The MSCI Asia Pacific Index (MXAP) of shares advanced 0.9 percent after the Standard & Poor’s 500 Index climbed 1.7 percent in New York on Dec. 9.
“Higher stock prices signal the market may continue to lean toward risk-on in the short term,” said Tohru Sasaki, head of Japan rates and foreign-exchange research at JPMorgan Chase & Co. in Tokyo. “The improving economic data from the U.S. is supportive of stocks, causing some dollar-selling.”
The Federal Reserve will hold a policy meeting tomorrow, where the U.S. central bank is expected to keep its target rate in a range of zero to 0.25 percent, according to another survey of economists.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
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