The dollar fell for a second day against the euro before government
housing and inflation reports that may add to speculation the Federal
Reserve will delay increasing interest rates.
The currency declined from a four-month high versus the yen as
economists at Moody's Investors Service Inc. and ABN Amro Holding NV
said the Fed won't be in a hurry to raise borrowing costs. Korea's won
rose for a second day after the government said it will use a stronger
currency to help slow inflation.
``Current market expectations of rate increases have gone too far,''
said Carsten Fritsch, a currency strategist in Frankfurt at Commerzbank
AG, Germany's second-biggest lender. ``Pricing in of Fed rate hikes had
been the main driver for the rising dollar for the last two weeks. It's
now paring those gains.''
The euro pared gains against the dollar after a report showed investor
confidence in Germany fell to a more than 15- year low this month. The
Mannheim-based ZEW Center for European Economic Research said its index
of investor and analyst expectations fell to minus 52.4, from 41.4 in
May. Economists expected a decline to minus 42.5.
Losses in the dollar accelerated earlier after the Wall Street Journal
and the Financial Times reported the Fed will probably leave borrowing
costs unchanged beyond its June policy meeting, said Yuji Saito, head
of foreign-exchange sales in Tokyo at Societe Generale SA.
The U.S. currency rose the most against the euro last week since 2005
as Fed Chairman Ben S. Bernanke said economic risks have faded. The
dollar will strengthen 3.5 percent to $1.50 per euro by year-end,
according to the median forecast of 39 firms surveyed by Bloomberg News.
U.S. housing starts probably dropped to an annual rate of 980,000 in
May, from 1.032 million the previous month, according to a survey. The
Commerce Department reported that housing starts fell to a 17-year low
of 954,000 in March.