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Euro Touches One-Month Low as Repayments Are Less Than Forecast

Feb. 22 (Bloomberg) -- The euro touched the lowest level against the dollar in more than a month after the European Central Bank said financial institutions will repay less of its three-year loans next week than economists forecast.

The 17-nation currency also trimmed gains versus the yen as the European Commission forecast the region’s economy will shrink for a second year in 2013. The Australian dollar rose the most in seven weeks versus the U.S. currency after central bank Governor Glenn Stevens said the bar for intervention was high. Japan’s currency weakened as Prime Minister Shinzo Abe prepared to meet with U.S. President Barack Obama.

“The repayment number came in quite a bit lower than expectations, so there was a bit of giveback on the euro,” Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut, said in a telephone interview. “The move down in the euro over the last few days has been pretty substantial.”

The euro fell 0.2 percent to $1.3170 at 11:11 a.m. in New York and touched $1.3152, the lowest level since Jan. 10. The shared currency is down 1.5 percent this week. It gained was little changed at 122.84 yen today after strengthening as much as 0.8 percent. The yen weakened 0.2 percent to 93.27 per dollar.

The euro may depreciate to the 2013 low of $1.2998 it reached on Jan. 4 if it declines past a support level at $1.3151, Cilline Bain, a London-based technical analyst at Credit Suisse, wrote today in a client note. Support is an area on a chart where buy orders may be clustered.

Aussie Gains

The Aussie rose at least 0.2 percent against all of its 16 major counterparts after Stevens said he’d need to be confident the currency was “seriously overvalued” before considering intervention to weaken it.

“Stevens’s comments are very firmly focused on what a strong currency means for inflation, rather than including any threat of action,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “The tone of his prepared comments indicates no great urgency to cut rates.”

The Australian dollar jumped as much as 0.9 percent, the biggest gain since Jan. 2, before trading up 0.6 percent at $1.0301.

New Zealand’s currency rose for the first time in three days against the greenback after a report showed credit-card spending increased for a third month in January.

The so-called kiwi gained 0.2 percent to 83.53 U.S. cents.

Loonie, Rupee

The Canadian dollar weakened versus all of its 16 most- traded counterparts as retail sales slid 2.1 percent to C$38.6 billion ($37.9 billion), bringing the value of retailer receipts to the lowest since September 2011. The nation’s inflation rate reached its lowest in more than three years.

The so-called loonie fell 0.5 percent to C$1.0240 per U.S. dollar after earlier weakening to C$1.0256, its lowest level since June 29. The currency dropped for a sixth day in its longest losing streak since August 2011.

India’s rupee gained against most of its major peers on optimism slowing inflation and prospects of an economic revival will attract capital flows. The currency rebounded from a one- month low as Brown Brothers Harriman & Co. said investors should consider purchasing the rupee as India’s economic fundamentals are improving.

The rupee appreciated 0.5 percent to 54.1850 per dollar after rising 0.6 percent, its biggest gain since Jan. 30.

German Confidence

The common currency declined as the ECB said 356 banks will hand back 61.1 billion euros ($80.5 billion) on Feb. 27, the first opportunity for early repayment of the second Longer-Term Refinancing Operation. The median forecast of economists in a Bloomberg News survey was for 122.5 billion euros.

The region’s gross domestic product will contract 0.3 percent in 2012, compared with a November prediction of 0.1 percent growth, the Brussels-based commission said.

The euro rose earlier after the Germany’s Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, climbed to 107.4 from 104.3 in January. That’s the fourth straight gain. Economists predicted an increase to 104.9, according to the median of 38 forecasts in a Bloomberg News survey.

“Given the more positive sentiment over the past couple of months in financial markets, the stronger German Ifo today is perhaps not that surprising,” said Kiran Kowshik, a foreign- exchange strategist at BNP Paribas SA in London. “We established a buy-euro recommendation yesterday.”

The meeting between Abe and Obama in Washington follows a Group of 20 summit in Moscow that ended Feb. 16 with finance ministers and central bankers signaling support for Japanese stimulus as long as Abe’s ministers cease public advocation of a weaker currency.

The yen has tumbled 12 percent in the past three months, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 0.5 percent, and the euro rose 3.1 percent.

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