Sept. 3 (Bloomberg) -- The dollar headed for a second-straight weekly drop versus the euro amid signs that the global recovery remains intact, sapping demand for the U.S. currency as a refuge.
The euro traded near a three-week high versus the pound before a European report that may show retail sales rose for a third month and after European Central Bank President Jean-Claude Trichet said a double-dip recession is “not in the cards.” Australia’s dollar was set for a third weekly gain as gains in stocks and commodities spurred demand for currencies linked to growth.
“The market has priced in downside risks to the global economy too fast and too far,” said Yousuke Hosokawa, a senior currency dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest bank. “Selling of riskier assets and buying of safer ones can’t continue perpetually.”
The dollar was at $1.2820 per euro as of 8:36 a.m. in Tokyo from $1.2825 yesterday in New York, set for a 0.4 percent decline this week. It reached $1.2856 on Sept. 1, the lowest level since Aug. 19. The U.S. currency was at 84.29 yen from 84.28 yesterday. Europe’s shared currency was at 108.06 yen from 108.09 yen. The euro was at 83.26 pence from 83.27 yesterday, when it reached 83.48, the strongest since Aug. 10.
The so-called Aussie traded at 90.93 U.S. cents from 91.10 cents yesterday, heading for a 1.2 percent advance this week.
The Standard & Poor’s 500 Index added 0.9 percent yesterday after rallying 3 percent the day before.
Sales in the 16-nation euro area rose 0.2 percent in July, matching the previous month’s gain, according to a Bloomberg News survey of economists ahead of today’s data.
‘On the Upside’
Speaking after the ECB left its benchmark rate at 1 percent, Trichet said risks to the inflation outlook are “on the upside.”
The euro area’s economy will probably expand between 1.4 percent and 1.8 percent this year, the central bank said. That’s up from a previous forecast range of between 0.7 percent and 1.3 percent.
Japan’s machinery orders, an indicator of business investment in three to six months, gained 2.6 percent in July and U.K. manufacturing expanded 0.3 percent that month, according to separate surveys ahead of Sept. 8 figures.
The National Association of Realtors’ index of pending home resales rose 5.2 percent in July after a revised 2.8 percent drop the prior month, data showed yesterday in Washington. A decline of 1 percent was forecast in a Bloomberg News survey.
“It may take more time before pessimism that the U.S. economy may slip into a double-dip recession can fully dissipate,” said Akira Maekawa, a senior economist at online currency trading company Global Futures & Forex Ltd. in Tokyo. “There are emerging signs that the market’s sensitivity to negative economic news is gradually abating.”
American employers other than government agencies added 40,000 positions in August, compared with 71,000 in July, according to a Bloomberg survey before the Labor Department releases the data today. The economy lost 105,000 jobs overall, economists forecast.
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