Dollar Maintains Losses Versus Peers Before U.S. Consumer Confidence Data

The dollar maintained (DXY) losses from last week against most of its major counterparts on speculation a report tomorrow will show U.S. consumer confidence rose to the highest since July, damping demand for haven assets.

The euro held a drop against the yen before Italy auctions as much as 20 billion euros ($26.1 billion) of bills and bonds this week amid concern the region’s debt crisis is worsening. The Australian and New Zealand dollars traded within 0.6 percent of two-week highs as Japanese stocks rose. China’s yuan advanced to the strongest level in 17 years on speculation policy makers will tolerate appreciation to stem capital outflows.

“Excessive pessimism has receded at the end of the year, and what we’re seeing is some unwinding of safe-haven buying of currencies like the dollar and yen,” said Kengo Suzuki, manager of the foreign-bond department in Tokyo at Mizuho Securities Co., a unit of Japan’s third-biggest listed bank by market value. “The U.S. economy is resilient.”

The dollar declined 0.1 percent to $1.3056 per euro and was little changed at 77.98 yen at 7:20 a.m. in London from last week in New York. The euro traded 101.83 yen from 101.86 on Dec. 23, when it dropped 0.2 percent.

The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, fell 0.2 percent last week.

Japan’s Nikkei 225 Stock Average rose 1 percent, following a 0.9 percent gain in the Standard & Poor’s 500 Index and a 0.8 percent climb in the Stoxx Europe 600 Index on Dec. 23.

Financial markets from Hong Kong to Singapore, the U.K. and the U.S. are closed for holidays today.

Recovery Signs

An index of consumer confidence in the U.S. rose to 58.6 this month from 56 in November, according to the median estimate of economists surveyed by Bloomberg News before the New York- based Conference Board reports the figures.

Home prices in 20 U.S. cities probably declined at a slower pace in October. Property values dropped 3.2 percent from the same month in 2010, the smallest year-over-year decrease since January, according to a separate Bloomberg survey. S&P/Case Shiller will release the data tomorrow.

“The U.S. economy seems to be moving towards solid growth,” said Takuya Kawabata, a researcher at Gaitame.com Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency-margin company. “The dollar might get sold on the back of good U.S. data against currencies such as the euro, pound or Australian dollar from a general bid for risk.”

The Australian dollar rose 0.1 percent to $1.0165. It touched $1.0219 on Dec. 21, the highest since Dec. 12. New Zealand’s dollar was at 77.40 U.S. cents from 77.44 last week. It reached 77.76 on Dec. 21, the most since Dec. 8.

The pound strengthened 0.2 percent to $1.5624.

Italian Issuance

Demand for the 17-nation euro was limited as Italy plans to sell 9 billion euros of 179-day bills and as much as 2.5 billion euros of zero 2013 bonds on Dec. 28. It will auction on Dec. 29 bonds due in 2014, 2018, 2021 and 2022.

The nation plans to sell almost 450 billion euros of securities in 2012 to pay for maturing bonds and bills and cover the government’s budget deficit, Il Sole 24-Ore said on Dec. 24, citing an interview with Maria Cannata, director of public debt. Italy needs to finance 23.6 billion euros of deficit and faces 202 billion euros of redemptions next year, the newspaper said.

Ten-year bond yields in Italy rose six basis points to 6.98 percent on Dec. 23, approaching the 7 percent level that spurred Greece, Ireland and Portugal to seek bailouts.

Yuan Policy

“I can’t find any reasons to aggressively buy the euro,” Kawabata said. “Italy has huge amounts of debt rolling over next year, so even if auctions this week go well, it doesn’t mean that they have overcome the underlying problem.”

The euro depreciated 1.3 percent this year against nine developed-nation counterparts, according to Bloomberg Correlation-Weighted Currency Indexes. The dollar advanced 1.1 percent and the yen gained 3.9 percent.

China’s currency climbed for a second day as the central bank set the reference rate 0.07 percent higher at 6.3167 per dollar. A depreciation of the yuan may fuel outflows of capital, Yi Xianrong, a researcher at the Institute of Finance and Banking that is affiliated to the Chinese Academy of Social Sciences, wrote in a commentary in the China Daily today.

“The fixing shows the central bank’s determination to push forward with appreciation,” said Liu Dongliang, a senior analyst in Shenzhen at China Merchants Bank Co., the nation’s sixth-biggest lender. “The market has fully taken the signals sent through the fixings.”

The yuan strengthened as much as 0.3 percent to 6.3181 per dollar, according to the China Foreign Exchange Trade System. That was its strongest level since the country unified the official and market exchange rates at the end of 1993.

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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