Euro Weakens as Unemployment Rises to Record; N.Z. Dollar Climbs

The euro fell against 12 of its 16 most-traded peers as a report showed unemployment in the currency bloc climbed to a record in February, adding to concern the economy will struggle to emerge from recession.

The 17-nation currency declined against the dollar as a purchasing-manager index of manufacturing stayed below the level that shows contraction. Sweden’s krona gained for a second day versus the dollar after a factory index for the country rose. New Zealand’s dollar climbed after the nation’s commodity export prices jumped. The European Central Bank meets on April 4.

“It’s a mix of the weaker-than-expected PMI data and the rise in the unemployment rate,” Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said in a phone interview. “With those two pieces of data coming in soft, along with general weakening in some of the macro data we’ve seen, there may be some expectations being priced in for additional ECB easing.”

The euro depreciated 0.2 percent to $1.2820 at 5 p.m. in New York. It was unchanged at 119.79 yen after sliding earlier to 119.15, the weakest level since Feb. 26. Japan’s currency declined 0.2 percent to 93.44 per dollar.

The euro trimmed early losses versus the greenback after Commerce Department data showed orders placed with U.S. factories rose 3 percent in February, the most in five months.

Dollar Index

The Dollar Index rose for the first time in four days. The gauge, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, gained 0.2 percent to 82.920.

Mexico’s peso rose to its strongest level in 19 months as a bill in the nation’s Senate designed to boost competition in the telecommunications industry fueled optimism about the outlook for foreign investment. The currency appreciated 0.7 percent to 12.2754 per dollar and reached 12.2592, the strongest level since September 2011.

New Zealand’s dollar climbed after data showed the nation’s commodity export prices increased 7.4 percent in March, the most in more than three years. The kiwi, as the currency is nicknamed, appreciated 0.5 percent to 84.14 U.S. cents and touched 84.46, the strongest level since Feb. 20.

The Australian currency gained as the Reserve Bank of Australia kept its key interest rate unchanged and Governor Glenn Stevens said “there are a number of indications that the substantial easing of monetary policy during late 2011 and 2012 is having an expansionary effect on the economy.”

The Aussie dollar rose 0.3 percent to $1.0450 and advanced 0.5 percent to 97.64 yen.

Unemployment Rises

The euro declined as the European Union’s statistics office said unemployment in the currency region increased to 12 percent and the January figure was revised up to the same level from 11.9 percent estimated earlier. That’s the highest since the data series started in 1995.

A gauge of manufacturing in the region slid to 46.8 last month from 47.9 in February, Markit Economics said. A reading below 50 indicates contraction.

“The PMI data was universally soft, and that’s pushed the euro lower,” Jack Spitz, Toronto-based managing director of foreign exchange at National Bank of Canada, said in a telephone interview. “There’s still downside risk with respect to structural issues and ahead of the ECB, which is expected to guide more dovishly given the economic misses.”

Pound Drops

Sterling was the biggest loser among the euro’s 16 most-traded peers, weakening for the first time in four days after a report showed U.K. factory output contracted in March more than forecast. The pound touched $1.5099, a 0.9 percent drop, its biggest since March 8. It weakened 0.6 percent to 84.88 pence per euro.

The krona gained versus most of its major peers as Stockholm-based Swedbank ABA said a PMI for the country advanced to 52.1 in March from 50.9 the previous month. The Swedish currency appreciated 0.4 percent to 6.4904 per dollar. It rose 0.6 percent to 8.3204 per euro.

Europe’s shared currency declined 1.8 percent over the past month versus nine developed-nation peers, according to Bloomberg Correlation-Weighted Indexes. The dollar was fell 0.1 percent, while the yen gained 0.1 percent.

“The euro should continue to weaken against a wide range of currency,” Simon Derrick, London-based chief currency strategist at Bank of New York Mellon Corp., said in an interview on Bloomberg Television’s “The Pulse” with Francine Lacqua and Guy Johnson. “For the euro-dollar, $1.23 or $1.24 doesn’t seem entirely unreasonable before the summer.”

Italy Deadlock

The common currency slid 2.8 percent versus the dollar last quarter as inconclusive elections in Italy on Feb. 24-25 left a political deadlock. President Giorgio Napolitano has formed a 10-person committee to negotiate a new government for the nation before his term expires in six weeks.

The delay drags out the uncertainty over budget discipline in the third-largest euro-area economy as cracks in the 17-member currency are exposed by bank-deposit losses imposed in Cyprus in return for a bailout.

Italian Democratic Party leader Pier Luigi Bersani said at a press conference today a broad coalition government would be the wrong choice. Italy needs leadership, he said.

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