The dollar snapped three days of gains against the
euro before reports that may show U.S. housing starts fell to a 17-year
low and consumer confidence slumped to the weakest in 26 years.
The U.S. currency pared its weekly advance versus the euro after
European Central Bank policy makers signaled they are unlikely to cut
interest rates that are double those in the U.S. The yen was set for
its biggest weekly decline in a month versus the dollar and euro as
Asian stock gains encouraged investors to increase holdings of
higher-yielding assets funded in Japan.
Japan's currency was set for the steepest weekly loss since April 18
versus the Australian and New Zealand dollars as falling volatility
boosted demand for so-called carry trades.
The current level of interest rates will help curb inflation, ECB
council member Yves Mersch said late yesterday, signaling policy makers
are in no rush to lower borrowing costs even as economic growth slows.
The ECB has avoided cuts in borrowing costs since last year, keeping
its main refinancing rate at a more-than six-year high of 4 percent, to
curb inflation. The Federal Reserve's benchmark rate is 2 percent.
Demand for the dollar weakened after the Federal Reserve reported
yesterday a 0.7 percent decline in industrial production last month,
following a revised 0.2 percent gain in March. The New York Fed's
general economic index, a gauge of manufacturing, declined to minus 3.2
in May, from 0.6 the prior month. Readings below zero signal
contraction.