The single European currency rebounded from the lowest level in a week against the dollar as Europe's Dow Jones Stoxx 600 Index rose for a sixth day and the cost of borrowing euros for three months dropped to the lowest since March. The pound fell for a third day versus the euro as Britain's construction industry slid in October. The European Central Bank and Bank of England meet to decide interest rates in two days' time.
The euro advanced to $1.2757 as of 6:32 a.m. in New York, from $1.2643 yesterday. It earlier weakened 0.5 percent to $1.2527, the lowest level since Oct. 28. The euro climbed to 126.72 yen, from 125.33. The yen fell to 99.34 per dollar, from 99.12 yesterday and 98.38 earlier today.
The pound dropped to 80.50 pence per euro, from 79.91 yesterday. It has declined 9 percent against the euro and 20 percent versus the dollar this year amid evidence Britain's economy is entering its first recession since the early 1990s. The Bank of England will cut the main interest rate to 4 percent from 4.5 percent on Nov. 6, according to a Bloomberg survey.
The euro dropped earlier against the yen along with other high-yielding currencies as the Reserve Bank of Australia lowered borrowing costs by a greater-than-forecast three- quarters of a percentage point to 5.25 percent, making it less attractive to buy overseas assets using funds borrowed in Japan.
Japan's currency traded at 67.70 per Australian dollar, after earlier rising to 65.05, from 67.05 yesterday. The yen dropped to 59.35 against the New Zealand dollar, after earlier strengthening to 57.62.
The yen typically gains when investors become more averse to risk, causing them to reverse so-called carry trades. In such transactions, they purchase higher-yielding assets with funds borrowed in nations with lower interest rates. Japan's key rate is 0.3 percent, the lowest among major economies.