“The euro is being driven by the headlines coming out of Portugal,” said Paul Robson, a senior currency strategist at Royal Bank of Scotland Group Plc in London. “In the past, markets have penalized currencies where you’ve got political concerns and a weak political backdrop. There’s been a lot of complacency about the euro-area periphery in general during the liquidity drench.”
The euro also weakened after a report showed services industries in the currency bloc shrank at a faster pace in June than initially estimated. An index based on a survey of purchasing managers was 48.3 last month, Markit Economics said. That’s less than an initial estimate of 48.6 on June 20 and below the level of 50 that divides expansion from contraction.
Europe’s common currency pared a loss against the dollar as initial claims for jobless benefits in the U.S. fell last week and the ADP Research Institute said American companies boosted employment by 188,000 workers in June, exceeding a Bloomberg survey’s forecast of a gain of 160,000.
A Labor Department report on July 5 may show U.S. nonfarm payrolls increased by 165,000 jobs, a Bloomberg survey forecast.
The data are being reported as the Federal Reserve weighs whether labor-market progress is enough to reduce the $85 billion of bonds it buys each month to put downward pressure on borrowing costs and spur growth.
The premium for one-year options granting the right to sell the euro against the dollar relative to those allowing for purchases increased to 1.95 percentage points, the highest since Sept. 12, the 25-delta risk reversal shows.
The euro “remains under pressure,” having dropped back below its 200-day moving average, Karen Jones, a technical strategist at Commerzbank AG in London, wrote today in an e- mailed note to clients.
The shared currency may find support from $1.2931 to $1.2885, she said, referring to a level where buy orders may be clustered. The euro’s 200-day moving average was at $1.3075 today, according to data compiled by Bloomberg.
The euro has still gained 4.6% this year, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The dollar gained 6.7%, the best performer, and the yen tumbled 8.7%.
Australia’s dollar weakened against most major counterparts after central-bank Governor Glenn Stevens said the currency had been too high.
“If the economy needs a lower exchange rate, it will probably get it,” he said in a speech in Brisbane to the Economic Society of Australia.
The Aussie dollar fell 0.9% to 90.65 U.S. cents and reached 90.53 cents, the lowest since September 2010.
Trading in over-the-counter foreign-exchange options totaled $16 billion, compared with $37 billion yesterday, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg. Volume in options on the dollar-Chinese yuan exchange rate amounted to $3.5 billion, the largest share of trades at 22%. Dollar-yen options totaled $3.2 billion, or 20%.
Dollar-yuan options trading was 5% above the average for the past five Wednesdays at a similar time in the day, according to Bloomberg analysis. Dollar-yen options trading was 4% below average.