Euro Falls Against Dollar, Yen

The euro fell the most against the dollar in two weeks after an industry report showing growth in Europe's service industries weakened prompted concern the economy is being hurt by the slowdown in the U.S., Bloomberg 2/5/2008 6:20:25 AM

The euro declined against 14 of the 16 most-active currencies as European industries, the biggest part of the $10.5 trillion economy, expanded at the slowest pace in four years last month. The region's central bank will probably keep its interest rate at 4 percent this week, according to all 55 economists surveyed by Bloomberg News.

The euro fell as much as 1.2 percent to $1.4658, the biggest loss since Jan. 21, and was at $1.4673 as of 7:37 a.m. in New York, from $1.4830 late yesterday. It dropped 0.4 percent to 157.65 yen, from 158.26 yesterday.

The euro extended its decline after it slipped below $1.48, triggering stop-losses, Maher said. Traders often place automatic orders to buy or sell assets to limit losses when they reach a specific level.

Europe's common currency stayed lower after euro-area retail sales data added to evidence of a faltering economy. Sales fell 2 percent from a year earlier in December, the most since at least January 1995, the European Union's statistics office in Luxembourg said today.

``This provides a negative picture for the growth outlook, and I'm not surprised the euro is coming under so much pressure,'' said Ian Stannard, a senior currency strategist in London at BNP Paribas SA, the most accurate currency forecaster Bloomberg tracks. ``The euro is a negative risk'' and may fall to as low as $1.42 per dollar this quarter, he said.

The euro reversed an earlier gain gain versus the yen as stock markets in the region followed their Asian counterparts lower, making it less attractive for investors to pursue so- called carry trades with loans funded in Japan.

Euro Falls Against Dollar, Yen