Dollar heads for weekly advance on signs global growth slowing

June 22 (Bloomberg) -- The dollar headed for its first advance in three weeks versus the euro after a report showed German business confidence dropped to the lowest in more than two years, fueling demand for the safety of the U.S. currency.

The yen weakened against most of its 16 major peers as Japanese lawmakers in the lower house prepared to vote on a bill to double sales tax. Higher-yielding currencies rebounded against the dollar as equities advanced, led by financial shares even as Moody’s Investor Service downgraded 15 global banks. Canada’s dollar gained as stocks rose.

“You don’t have European flashpoints right now, but we knew beforehand global growth was suffering and I think that expecting any quick reversal is not in the cards,” said Andrew Wilkinson, chief economic strategist at Miller Tabak in New York. “Financials are rebounding quite strongly, so the market may be set for a reprieve today, but it should be no surprise the world is in the shape that it’s in, given the massive cloud over the euro zone.”

The dollar traded at $1.2551 per euro at 9:05 a.m. New York time, from $1.2540 yesterday. It has added 0.7 percent this week. The U.S. currency was at 80.36 yen, after appreciating to 80.52, the strongest level since May 16. It has gained 2.1 percent this week, the most since Feb. 24. The yen lost 0.2 percent to 100.85 per euro.

Market Forces

Futures on the Standard & Poor’s 500 rose 0.5 percent and the Standard & Poor’s GSCI Index of 24 raw materials increased 0.4 percent.

The business climate index for Germany, based on the Ifo institute’s survey of 7,000 executives, slid to 105.3 from 106.9 in May. Economists predicted a decline to 105.6, according to the median estimate in a Bloomberg News survey.

Data yesterday showed euro-area manufacturing shrank at the fastest pace in three years, and a gauge of Chinese industrial output indicated contraction. More Americans than forecast filed claims for jobless benefits, manufacturing in the Philadelphia region shrank and sales of existing homes fell, reports showed.

Canada’s dollar added 0.2 percent to C$1.0279 after touching C$1.0300, its lowest in a week.

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