Euro falls to two-week low on Spain growth concern; krona drops

The euro fell to a two-week low against the dollar after Spain’s bonds dropped and the central bank said gross domestic product declined this quarter, stoking concern the region’s debt crisis is worsening.

The 17-nation currency weakened for a seventh day against the yen after finance ministers from Germany, the Netherlands and Finland said Europe’s rescue fund should assume a limited role in banking recapitalizations. The dollar and yen rose against their most-traded counterparts on speculation central banks around the world will struggle to revive growth, spurring demand for safer assets. Sweden’s krona declined after a report showed consumer confidence fell more than economists forecast.

“The selloff in the euro stems from questions over what’s going to happen with the banking union and bailout following the comments from the three finance ministers,” Andrew Busch, a global currency strategist at Bank of Montreal in Chicago, said in a telephone interview.

The euro depreciated 0.4 percent to $1.2842 at 10:48 a.m. New York time, reaching the weakest level since Sept. 12. The shared currency dropped 0.4 percent to 99.94 yen, extending its decline during the past seven trading days to 3.2 percent. The yen was little changed at 77.82 per dollar.

Euro Target

Europe’s common currency may weaken toward $1.2740, should it break below a key support level at the 200-day moving average, currently at $1.2827, said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. Support refers to an area where buy orders may be clustered.

Sweden’s krona fell against all of its 16 major counterparts after the National Institute of Economic Research said its consumer confidence index dropped to 2 this month from 5.4 in August. Economists predicted a reading of 5, according to a Bloomberg survey.

The krona slid 0.9 percent to 6.6289 per dollar and weakened 0.4 percent to 8.5124 per euro. The Swedish currency has gained 4.4 percent versus the greenback this quarter, the most out of any its major peers.

The Mexican peso fell versus most of its major peers as emerging market currencies declined amid lower commodity prices and speculation that debt purchases in the U.S. won’t spur growth.

The currency fell 0.5 percent to 12.9296 versus the dollar after earlier depreciating to 12.9417.

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