April 30 (Bloomberg) -- The euro dropped from a one-week high against the dollar as the euro area’s jobless rate rose to a record in March and inflation slowed, adding to signs the region is struggling to emerge from recession.
The common currency fell versus most major peers amid bets the European Central Bank will lower its key interest rate when policy makers meet May 2. The Federal Reserve starts a two-day meeting today. The yen rose, paring a seventh straight monthly decline against the dollar, the longest losing streak since 2001. Norway’s krone dropped as retail sales stalled in March.
“People are selling the euro, and the excuse is that the unemployment rate was not very good,” Douglas Borthwick, a managing director and head of foreign exchange at Chapdelaine FX, a unit of Tullett Prebon Plc, in New York, said in a telephone interview. “People also believe that there’s an increased possibility you could see some type of interest-rate cut, although the euro has had rate cuts priced into it for pretty much the last year.”
The euro declined 0.2 percent to $1.3073 at 8:46 a.m. New York time after rising to $1.3121, the strongest since April 19. It has advanced 2 percent this month. The common currency slid 0.3 percent to 127.66 yen. The Japanese currency added 0.1 percent to 97.62 per dollar, having weakened 3.5 percent since the end of March.
The ECB will cut its main refinancing rate by a quarter-percentage point to a record 0.5 percent, according to economists surveyed by Bloomberg News.
“The market is really just thrashing around ahead of all of the big central-bank news later in the week,” said Adam Cole, head of Group of 10 currency strategy at Royal Bank of Canada in London. “The market seems to be pretty much priced for a cut,” he said.
Consumer prices in the 17-nation bloc increased an annualized 1.2 percent in April after climbing at a 1.7 percent pace a month earlier. The median estimate of 38 analysts in a Bloomberg survey called for a drop to 1.6 percent. The unemployment rate in the region rose to a record 12.1 percent in March from 12 percent a month earlier.
The euro has gained 1.5 percent in the past month, the best performance after the New Zealand dollar’s 1.8 percent increase, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The dollar fell 0.8 percent and the yen tumbled 4.5 percent.
The yen’s gains today pared a monthly slump of at least 2.6 percent against all its 16 most-traded peers as unprecedented stimulus measures announced by the Bank of Japan on April 4 spurred investors to sell the Japanese currency. Demand for the Japanese yen was also sapped as the MSCI World Index of stocks rose 2.5 percent this month.
The U.S. central bank is buying $85 billion of bonds each month in its third round of its quantitative-easing strategy to put downward pressure on borrowing costs. While Chairman Ben S. Bernanke said after the central bank’s previous meeting in March that further labor-market gains were needed to consider reducing monetary easing, minutes showed officials discussed slowing the pace of buying.
The Norwegian krone snapped a four-day advance against the dollar after a report by the Oslo-based statistics office showed retail sales excluding motor vehicles and petrol stations were unchanged in March, after rising 0.5 percent in February. Sales fell an annual 4.2 percent.
The krone weakened 0.2 percent to 5.8226 per dollar, paring its monthly gain to 0.4 percent. It was little changed against the euro at 7.6119.
New Zealand’s currency, nicknamed the kiwi, slid against the majority of its most-traded counterparts after the statistics bureau said home building approvals fell 9.1 percent in March compared with the median forecast in a Bloomberg survey of economists for an increase of 2 percent.
The “unambiguously weaker-than-expected” data spurred selling of the so-called kiwi, said Mike Jones, a foreign-exchange strategist at Bank of New Zealand in Wellington.
The New Zealand dollar slid 0.1 percent to 85.63 U.S. cents. It traded at NZ$1.2076 per Australian dollar.
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