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The euro weakened against most major counterparts on speculation the European Central Bank has finished raising interest rates as the region’s sovereign-debt crisis curbs economic growth.
The yen rose versus 12 of its 16 major peers as U.S. consumer confidence dropped to the lowest since April 2009 and home prices fell, adding to demand for safer assets. The euro snapped a two-day gain versus the dollar after ECB President Jean-Claude Trichet said yesterday the bank is reviewing its assessment of inflation risks, and data today showed confidence in the region’s economy plunged. The ECB meets next week.
“There’s signs that the ongoing financial-market troubles are starting to have a more noticeable impact not only on confidence but on actual economic activity,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. “The challenges for the euro are accumulating, and this is a reason the euro is down today.”
U.S. stocks fell as the Conference Board’s index slumped to 44.5 this month, from a revised 59.2 reading in July, figures from the New York-based private research group showed. It was the biggest point drop since October 2008. Economists predicted the August gauge would fall to 52. The Standard & Poor’s 500 Index dropped 0.6 percent.
The S&P/Case-Shiller index of property values in 20 cities fell 4.5 percent in June from a year earlier, after dropping 4.6 percent in the 12 months ended in May, the group said today in New York. The median forecast was for a 4.6 percent drop.
“We’re going to see a lot of the risk-off trades come back into the picture during the rest of the week,” said Robert Sinche, global head of currency strategy at Royal Bank of Scotland Plc in Stamford, Connecticut. “We continue to see euro- dollar move with equity prices and risk in general.”
A Credit Suisse AG index shows traders are betting the ECB will cut its key rate by 20 basis points, or 0.2 percentage point, in the next 12 months. A month ago, they wagered it would raise rates by 22 basis points.
The euro extended losses after the European Commission in Brussels said an index of executive and consumer sentiment in the single-currency region fell to 98.3 in August from a revised 103 in July. That’s the lowest since May 2010 and below the 100.2 reading predicted.
The Fed is scheduled to release the minutes of its Aug. 9 meeting today. Policy makers pledged at the session to keep interest rates at a record low through at least mid-2013.