The euro dropped from a five-month high against the yen after Moody’s Investors Service cut the credit ratings of five Spanish regions and French industrial confidence fell to the lowest in more than three years.
The 17-nation currency declined to the lowest in a week versus the dollar as Spanish newspaper El Confidencial said the government told the European Union it will miss its budget deficit target this year. The yen rose after falling past 80 per dollar for the first time in three months as weakness in global stocks and commodities outweighed signs Japan’s economy is closer to contraction. The Canadian dollar depreciated before the central bank announces interest rates today.
“We had the downgrade of some of the regions in Spain overnight, and this may have been negative” for the euro, said Marcus Hettinger, a currency strategist at Credit Suisse Group AG in Zurich. “The French business confidence indicator was quite a disappointment. That’s probably also a reason why the euro weakened. It looked like we could get some stabilization.”
The euro fell 0.8 percent to 103.53 yen at 8:43 a.m. New York time after appreciating to 104.59 yen, the strongest level since May 4. The common currency dropped 0.7 percent to $1.2970. The yen gained 0.2 percent to 79.78 per dollar after declining earlier to 80.01, the weakest since July 6.
Futures on the Standard & Poor’s 500 Index lost 1.2 percent and the S&P GSCI Index of 24 raw materials sank 1.2 percent.
The euro will probably be little changed for the rest of this year and trade at about $1.30 by the end of December, Hettinger said.
Bank of Canada
The Canadian dollar fell 0.5 percent to 99.68 cents versus the U.S. currency and reached 99.76 cents, the weakest level since Aug. 8.
Bank of Canada officials led by Governor Mark Carney will keep the key interest rate at 1 percent today, according to all 26 economists in a Bloomberg survey. They’re scheduled to release the decision at 9 a.m. Toronto time.
South Africa’s rand tumbled against all of its major counterparts as copper dropped to its lowest level in more than six weeks. Metals and other commodities account for 45 percent of the nation’s exports. The rand slid to the lowest in a week versus the dollar, losing as much as 1.5 percent to 8.7722.
The yen dropped earlier against the dollar as Economy Minister Seiji Maehara, who has been calling for more action from the central bank, said today he may attend the Bank of Japan’s next meeting on Oct. 30 if his schedule permits.
The Japanese currency weakened 1.7 percent against the dollar over the past three months and dropped 8.4 percent versus the euro. It fell for an eighth day against the dollar yesterday, the longest losing streak in seven years.