The euro fell to the lowest level against the dollar in more than two
weeks as a drop in business confidence in Germany reduced speculation
that the European Central Bank will raise interest rates again this
year.
The yen rose against the dollar and the euro as a decline in U.S.
stocks prompted investors to pare holdings of higher- yielding assets
financed by loans in Japan.
``We've probably seen a medium-term peak in the euro,'' said Fabian
Eliasson, vice president of currency sales at Mizuho Corporate Bank
Ltd. in New York. ``The European economy is slowing, and it's less
likely for the European Central Bank to pull the trigger and hike.''
Sterling weakened from the highest level against the euro in seven
weeks after British retail sales dropped in June by the most since at
least 1986 as accelerating inflation prompted consumers to cut
spending.
U.S. home resales dropped to a 4.86 million annual rate in June, the
lowest level in a decade, from a 4.99 million pace the prior month, the
National Association of Realtors said today in Washington.
Falling U.S. home prices will force financial firms to write down $1
trillion from their balance sheets, crimping bank lending and sparking
sales of assets, said Bill Gross, who runs the world's biggest bond
fund, at Pacific Investment Management Co. in Newport Beach,
California. Financial firms have reported $467.9 billion in losses and
writedowns since the start of 2007.
``It's a contest of the ugliest,'' said Alan Ruskin, head of
international currency strategy in North America at RBS Greenwich
Capital Markets Inc. in Greenwich, Connecticut. ``The weakness in the
U.S. is not an isolated event.'' He said of the dollar versus the euro
that ``it's hard to see the broad range of $1.58 to $1.60 to be
broken.''