American focus: euro rose

The dollar fell for a second day against the yen after reports signaled a slowing U.S. economy, boosting the case for the Federal Reserve to take more steps to bolster growth.

The U.S. currency declined versus 15 of its 16 major peers after initial jobless claims rose last week and inflation declined in May. The consumer price index fell 0.3 percent, more than forecast and the biggest drop since December 2008, after no change the prior month, the Labor Department reported today in Washington. Claims for jobless benefits unexpectedly climbed by 6,000 to 386,000 in the week ended June 9 from a revised 380,000 the prior week that was more than first estimated, Labor Department figures showed today in Washington.

The euro rose versus the dollar on bets its 5 percent decline since April was overdone even as Spanish bond yields rose to a record after Moody’s Investors Service cut the nation’s credit rating. The euro fell earlier against the yen after Italy’s costs of borrowing for three years climbed to the highest since December at an auction. Investors were also waiting for an election in Greece this weekend that may indicate whether the nation will remain in the euro bloc.

Moody’s yesterday cut Spain’s rating three steps to Baa3, one level above junk, citing its increased debt burden and weakening economy. The Spanish 10-year yield climbed as much as 25 basis points, or 0.25 percentage point, to a euro-era record 6.998 percent.

New Zealand’s dollar rallied against all 16 major counterparts after the central bank gave no immediate sign it would cut interest rates when it kept its benchmark at a record low.

The kiwi approached a one-month high after Reserve Bank of New Zealand Governor Alan Bollard said the current exchange rate is more comfortable than March and signaled he expects to hold the 2.5 percent official cash rate till mid-2013.