Euro approaches seven-week high after German confidence report

The euro approached a seven-week high against the dollar after German business confidence fell less than some economists forecast, suggesting the region’s largest economy can withstand the sovereign-debt crisis.

The 17-nation currency climbed toward the strongest since July versus the yen after German Finance Minister Wolfgang Schaeuble said Germany and France will create a working group to enhance the region’s fiscal and monetary union. Sweden’s krona appreciated against all of its 16 major peers after retail sales increased more than forecast.

“The German data is helpful for the euro,” David Mann, regional head of research for the Americas at Standard Chartered in New York, said in a telephone interview. “It’s still one of the most mainly watched surveys in the euro zone.”

The euro rose 0.1 percent to $1.2527 at 9:19 a.m. in New York after climbing to $1.2590 on Aug. 23, the strongest level since July 4. The common currency gained 0.1 percent 98.57 yen after advancing to 99.18 yen on Aug. 21, the highest since July 5. The dollar was little changed at 78.70 yen.

U.K. financial markets are shut today in observance of the Summer Bank Holiday.

Schaeuble said the working group will prepare solutions in the areas of banking union and a strengthening of a fiscal union and monetary union. He spoke after meeting with French Economy and Finance Minister Pierre Moscovici in Berlin. Moscovici said the two states will work on “structural” solutions.

‘Decent Read’

German Chancellor Angela Merkel told officials in her coalition calling for a Greek exit from the euro to “weigh their words” as she signaled a renewed determination to keep the single currency intact.

The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 102.3 from a revised 103.2 in July. The lowest prediction in a Bloomberg News survey of 37 economists was for a decline to 101.

“Some in the market had expected a much worse report, and that’s why the euro gained some ground,” said Peter Rosenstreich, chief currency analyst at Swissquote Bank SA in Geneva. “The key number may be softer than expected, but it’s still a decent read, and is consistent with the economy that remains resilient. It’s not an absolute collapse.”

The euro has weakened 4.8 percent in the past six months, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes as Europe’s debt crisis worsened. The yen was the best performer, rising 5.3 percent, and the dollar appreciated 2.6 percent.

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