The euro was 0.4 percent from its lowest level versus the dollar since November as investors held the largest position in two years betting on a drop in the currency before the region’s central bank meets this week.

Europe’s common currency slid 3.2 percent in the past three months as the European Central Bank cut interest rates to spur inflation that slowed in July to the weakest in almost five years. Australia’s dollar rose briefly after retail sales climbed twice as fast as economists forecast. The greenback held gains versus developed-market peers before data tomorrow predicted to show growth in services accelerated. The Korean won and Malaysian ringgit strengthened.

“The trend in euro is clearly down, and we think that story’s got further to run,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. “Draghi will maintain his dovish tone for sure, given the inflation data across Europe has been mostly weak,” he said, referring to ECB President Mario Draghi.

The euro was little changed at $1.3423 as of 7:06 a.m. in Tokyo after touching $1.3367 on July 30, its lowest level since Nov. 12. It was at 137.87 yen. The yen fell 0.1 percent to 102.72 per dollar after dropping 0.8 percent last week.

The ECB will probably keep policy unchanged on Aug. 7 as recent data hasn’t been of “sufficient magnitude (yet) to warrant an immediate policy response,” New York-based Royal Bank of Canada strategist Elsa Lignos wrote in a note to clients.

European Inflation

Consumer prices in the 18-nation currency bloc rose 0.4 percent from a year earlier in July compared with a gain of 0.5 percent in June, a July 31 report showed. That was the weakest since October 2009 and below the median forecast in a Bloomberg News survey.

Futures traders’ bets that the euro will decline against the dollar rose to the most since August 2012, figures from the Washington-based Commodity Futures Trading Commission show.

The difference in the number of wagers by hedge funds and other large speculators on an depreciation in the euro compared with those on a rise — net shorts — was 108,075 on July 29, compared with 88,823 a week earlier.

Australia’s dollar gained as much as 0.2 percent after a statistics bureau report showed retail sales rose 0.6 percent in June from the previous month, compared with the median prediction in a Bloomberg survey of 0.3 percent. The traded little changed at 93.15 U.S. cents after dropping 0.9 percent last week.

Dollar Strength

The Bloomberg Dollar Spot Index was at 1,020.98, little changed from last week when it added 0.7 percent, the most since the period ending Jan. 17. It touched 1,023.42 on Aug. 1, the highest since March 20.

Aggregate net futures positions wagering on gains in the U.S. currency against major peers — the yen, euro, pound, franc, Mexican peso and the dollars of Australia, Canada and New Zealand — rose to 13,297 last week, crossing into bullish territory for the first time since April.

U.S. data tomorrow is forecast to show the Institute for Supply Management’s non-manufacturing index rose to 56.5 in July from 56 in June, according to a separate survey. Readings greater than 50 signal expansion.

The dollar was the best performer over the past month among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Currency Indexes, adding 1.5 percent. The euro was little changed and the yen climbed 0.7 percent.

Won Rises

The Korean won and Malaysian ringgit rose against the dollar after U.S. jobs data trailed estimates, reducing bets the Federal Reserve will bring forward an increase in interest rates.

Employers in the world’s largest economy added 209,000 workers in July, less than a revised 298,000 in June and the 230,000 median estimate in a Bloomberg survey, according to an Aug. 1 report.

The won rose 0.3 percent to 1,033.55 per dollar, the biggest advance in five weeks, according to data compiled by Bloomberg. The ringgit gained 0.3 percent to 3.2020 per dollar, the strongest climb since July 17.

 

Source: Bloomberg

 

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