The euro fell the most in four months against the US dollar after European Central Bank (ECB) President Jean-Claude Trichet signaled he may not raise interest rates next month and concern rose that Greece’s debt crisis is worsening.
The shared currency tumbled on Friday by the most in a year after Der Spiegel magazine reported that EU ministers were convening an emergency meeting after Greece threatened to withdraw from the euro region. Greece disputed the report.
The yen strengthened as a plunge in commodities prompted investors to unwind bets in higher-yielding assets financed with Japanese currency. Gains in consumer prices may have slowed last month even with the US adding more jobs than forecast last month, a report next week is forecast to show.
The euro fell 3.3 percent against the greenback to US$1.4316, from US$1.4807 in the five days ended Friday last week. It was the biggest weekly decline since Jan. 7. The shared currency touched US$1.4311 on Friday, the lowest level since April 19. It dropped 4 percent versus the yen to ￥115.44, from ￥120.22, in the biggest weekly loss since May last year.
The Japanese currency advanced 0.07 percent against the dollar to ￥80.63, from ￥81.19. It touched ￥79.57 on Friday, the strongest since March 18, when G7 central banks moved to curb the yen’s gain after Japan’s worst earthquake.
Futures traders raised bets as of Tuesday to an almost four-year high that the euro would gain against the US dollar.
The euro fell after the ECB kept its key interest rate unchanged at 1.25 percent on Thursday and Trichet refrained from using the phrase “strong vigilance” on inflation, which might have signaled a boost next month. He instead said inflation risks would be watched “very closely.”
The ECB boosted rates last month. The US Federal Reserve has held its benchmark interest rate at zero to 0.25 percent since December 2008 to spur the US economy.
The pound slipped versus half its major counterparts after the Bank of England kept its key rate at a record low 0.5 percent this week. Signs the economic recovery is losing momentum kept a majority of policymakers focused on stimulating growth.
Sterling fell 2 percent against the US dollar to US$1.6367, from US$1.6707. The pound gained 1.3 percent to ￡0.8749 per euro.
The euro is the best performer this year among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Currency Indexes, rising 2.8 percent. The US dollar has dropped the most — 4.6 percent.