Today Dollar NEWS PREDIKSI (PREDICTION FOREX MARKET)

Yen Falls to 1-Month Low as U.S. Stocks Gain, Spur Carry Trade

May 27 (Bloomberg) -- The yen fell to a one-month low against the euro and dropped versus the dollar as an advance in U.S. stocks encouraged investors to add to holdings of higher- yielding assets funded in the Japanese currency.

The yen declined against the Australian and the New Zealand dollars, two favorites of so-called carry trades. The Australian dollar traded close to a 25-year high versus its U.S. counterpart, while the kiwi dollar gained a sixth straight day. The U.S. dollar extended gains versus the yen and euro as new- home sales in the U.S. unexpectedly rose in April.

``We are seeing improvement in risk appetite, and that's weakening the yen,'' said Samarjit Shankar, director of global strategy for the foreign exchange group in Boston at Bank of New York Mellon. The firm is the world's largest custodian bank, with more than $20 trillion in assets under administration.

The yen touched 163.89 per euro, the weakest since April 28, before trading at 163.82 at 10:07 a.m. in New York, from 163.10 yesterday. It declined to 104.29 per dollar, from 103.43. The euro fell to $1.5708, from $1.5770 yesterday, after rising to $1.5818, the highest level since April 24.

The Standard & Poor's 500 Index rose 0.6 percent.

In the carry trade, investors get funds in a country with low borrowing costs and invest in another with higher interest rates, earning the difference between the two. The risk is currency moves erase those profits.

Japan's benchmark rate of 0.5 percent compares with a central bank rate of 4 percent in Europe, 2 percent in the U.S., 7.25 percent in Australia and 8.25 percent in New Zealand.

Euro's Reversal

The euro reversed gains versus the dollar after reports showed German consumer confidence fell more than economists forecast and French business confidence declined to the weakest in more than two years in May.

GfK AG's index for June declined to 4.9, from 5.6 in May, the Nuremberg-based market-research company said today. Economists in a Bloomberg survey predicted the gauge would fall to 5.7, from an initial May estimate of 5.9. An index of sentiment among 4,000 French manufacturers slid to 102, the lowest since December 2005, from 106 in April, the country's statistics office said.

``We see weakness developing in many aspects and that's why we are seeing a retreat'' from the euro, said Hans-Guenter Redeker, global head of currency strategy in London at BNP Paribas SA, France's biggest bank.

Consumer Prices Rise

Consumer prices in the euro region rose 3.5 percent in May, faster than the 3.3 percent gain the previous month, according to a Bloomberg News survey. The statistics office will release the figure on May 30.

The dollar extended gains as new-home sales in the U.S. rose 3.3 percent to an annual pace of 526,000 from a 509,000 rate the prior month that was the lowest in 17 years, Commerce Department data showed. A separate report today showed home prices dropped last quarter by the most in at least 20 years.

Confidence among U.S. consumers fell to the lowest level in more than 15 years. The Conference Board's confidence index declined more than forecast to 57.2, the lowest level since October 1992, from a revised 62.8 in April, the New York-based research group said.

Dollar News

Dollar Snaps Two-Day Drop on Rising Bets for Fed Rate Increase

May 22 (Bloomberg) -- The dollar snapped two days of declines against the euro, rallying from the lowest level in a month, as traders added to bets the Federal Reserve will raise interest rates by year-end.

The U.S. currency also gained versus the yen after minutes of the Fed's April meeting yesterday showed most policy makers viewed the cut in the target rate to 2 percent as ``a close call,'' indicating the central bank has gone on hold to stem inflation. The New Zealand dollar rose to a two-week high after tax cuts reduced the need to lower borrowing costs.

``The Fed is telling us to not think in terms of easing,'' said Alan Ruskin, head of international currency strategy at RBS Greenwich Capital Markets in Greenwich, Connecticut. ``That is the most important feature behind the dollar comeback today.''

The U.S. currency strengthened to $1.5708 per euro as of 10:22 a.m. in New York, from $1.5795 in New York yesterday. It earlier touched $1.5814, the lowest level since April 24. The dollar rose to 104.04 yen, from 103.05 yen. The euro traded at 163.44 yen, up from 162.76 yen.

The dollar extended its gains after U.S. house prices fell less than expected in the first quarter. The Office of Federal Housing Enterprise Oversight said its house price purchase index declined 0.2 percent, from a revised 0.3 percent gain the previous quarter. The median forecast in a Bloomberg News survey of 13 economists was for a drop of 1.3 percent.

The New Zealand dollar rose after Finance Minister Michael Cullen cut taxes, easing pressure on the central bank to lower interest rates to support the economy. The kiwi, as it is known, climbed to 78.96 U.S. cents, the highest level since May 7, before trading at 78.54 cents, from 77.70 yesterday.

Fed Rate Bets

The Australian dollar yesterday touched the highest since being allowed to trade freely in 1983 as investors sought the nation's higher-yielding debt. The currency, which climbed to as high as 96.54 U.S. cents yesterday, was at 95.84 cents today, from 96.25. The Aussie has risen 10 percent this year, the second-biggest gain among the 16 most-traded currencies.

The Aussie will climb to equal value with the U.S. currency for the first time since 1982 as the central bank considers raising interest rates, say banks including RBC Capital Markets and ABN Amro Holding NV.

Futures on the Chicago Board of Trade show traders see a 92 percent likelihood the Fed will keep its target rate for overnight lending between banks at 2 percent on June 25, up from odds of 88 percent yesterday. Traders also see a 32 percent probability the Fed will lift the rate in September to 2.25 percent, up from a 21 percent chance yesterday.

``The Fed has a more balanced view on inflation and growth,'' said Matthew Strauss, a senior currency strategist at RBC Capital Markets Inc. in Toronto, a unit of Canada's biggest bank by assets. The dollar decline has ``lost momentum.''

ECB Interest Rate

The dollar has fallen 2 percent against the euro since May 8, after European Central Bank President Jean-Claude Trichet said inflation remains the bank's top priority. That signaled policy makers won't cut the 4 percent benchmark interest rate soon.

The dollar advanced to $1.9806 against the British pound, from $1.9732, and was at 1.0334 versus the Swiss franc, from 1.0250. The Fed cut its 2008 economic growth projection to a range of 0.3 percent to 1.2 percent, from its January forecast of 1.3 percent to 2 percent, according to the minutes.

The Dollar Index traded on ICE futures in New York, which tracks the dollar against currencies of six trading partners, rose to 72.071, from 71.938 yesterday.

Oil Price

Gains for the dollar may be limited as record oil prices stoke inflation while slowing economic growth, said Hans-Guenter Redeker, global head of currency strategy in London at BNP Paribas SA, France's biggest bank. Oil surpassed $135 a barrel for the first time today before settling back to around $133.

``The dollar will remain on the back foot,'' Redeker said. It will be hurt by ``further increases in commodity prices.''

The euro climbed versus the dollar yesterday after German business confidence unexpectedly rose, bolstering speculation the ECB won't cut interest rates.

The Munich-based Ifo institute said its index, based on a survey of 7,000 executives, rose to 103.5, from 102.4 in April. Economists predicted a decline to 102, according to the median of 44 forecasts in a Bloomberg News survey. Germany is the biggest economy in the euro region.

The euro may rise to $1.5850 against the dollar in one week, based on charts used to predict price movements, said Masashi Hashimoto, a senior currency analyst at Bank of Tokyo-Mitsubishi UFJ Ltd.

The currency has held above so-called support at the five- and 21-day moving averages of $1.5663 and $1.5553, respectively, signaling further gains in the near term, Tokyo-based Hashimoto said. Support is where buyers are expected to outweigh sellers.

The resistance level of $1.5850 represents a 76.4 percent reversal of the euro's slide to a low of $1.5285 on May 8, from a record high of $1.6019 on April 22, based on a series of numbers known as the Fibonacci sequence. Resistance is a level where selling is expected to outweigh buying.

EURO NEWS and prediksi forex

Dollar Rises as Stock Gains Encourage Demand for Higher Yields

May 14 (Bloomberg) -- The dollar rose against the yen as an increase in U.S. stocks encouraged investors to buy higher- yielding assets funded in Japan.

The 15-nation euro is overvalued by as much as 20 percent against the dollar, French Finance Minister Christine Lagarde said late yesterday. The Australian dollar fell against the Canadian dollar, the U.S. dollar and the pound as wage growth unexpectedly slowed last quarter.

``A stronger equity market is helping risk appetite,'' said Fabian Eliasson, vice-president of foreign exchange sales at Mizuho Corporate Bank in New York. ``In the short run, we are going to see higher dollar-yen.''

The dollar increased 0.4 percent to 105.13 yen at 10:06 a.m. in New York, from 104.75 yesterday. The dollar advanced 0.2 percent to $1.5445 per euro, from $1.5474. It touched the all- time low of $1.6019 on April 22. Japan's currency fell 0.2 percent to 162.32 per euro, from 162.10.

The Australian dollar dropped for a second day versus the U.S. dollar after a government report showed wage growth unexpectedly slowed last quarter, increasing concern economic growth is easing. The Aussie decreased 0.7 percent to 93.42 U.S. cents, 1.1 percent to 1.0705 versus the Canadian dollar and 0.5 percent to 2.0785 against the pound.

U.S. stocks advanced, led by financial shares, on a report showing slower-than forecast U.S. inflation and a narrower-than- estimated loss at mortgage-finance company Freddie Mac. The Standard & Poor's 500 Index increased 0.7 percent.

U.S. Inflation

Consumer prices in the U.S. rose 0.2 percent in April, following a 0.3 percent increase the previous month, the Labor Department said today in Washington. The median forecast of 77 economists surveyed by Bloomberg News was for an advance of 0.3 percent last month.

Finance ministers from the Group of Seven nations said in Washington on April 11 they were concerned about ``sharp fluctuations in major currencies'' and their ``possible implications for economic and financial stability.''

That message is being ``heard'' by financial markets, Lagarde said at a press conference in Brussels yesterday. The euro trading at $1.55 ``is still at 10 percent, 15 percent, 20 percent above the appropriate fundamentals,'' she said.

Futures on the Chicago Board of Trade showed a 92 percent chance the Fed will hold its target lending rate at 2 percent at its next meeting on June 25, compared with 94 percent odds yesterday. The balance of bets is for a cut of a quarter- percentage point. There's a 28 percent chance of an increase to 2.25 percent in September.

Dollar Outlook

The dollar will strengthen against most major currencies in the next six months as the Fed stops reducing interest rates, a survey of Bloomberg users showed.

The end of rate cuts will make American assets more attractive to international investors, according to U.S. respondents in the monthly Bloomberg Professional Global Confidence Index, which questioned 3,447 users from Chicago to London to Hong Kong. While users in the U.S. grew optimistic about the greenback, participants in Germany and France became pessimistic about the euro for the first time since the survey started in November.

The Fed has cut the target lending rate seven times since Sept. 18 to avert a recession, pushing the dollar down more than 10 percent versus the euro and yen.

FOREX NEWS Prediction

Dollar Climbs on Speculation Fed to Halt Cuts, Losses Overdone

May 12 (Bloomberg) -- The dollar rose against the yen for the first time in six days as traders speculated the Federal Reserve won't cut interest rates next month.

The currency increased from a three-week low versus the yen as a chart traders use to predict price movements signaled last week's 2.4 percent decline was too large to be sustained. The yen dropped against the South African rand and the Brazilian real as speculation the worst of the financial crisis is over led investors to buy higher-yielding assets funded in Japan.

``It's not going to be an express train toward a much stronger dollar, but it will trade stronger slowly and gradually,'' said Jeff Gladstein, global head of foreign- exchange trading at AIG Financial Products in Wilton, Connecticut. ``The U.S. is not going to have as deep a downturn as everyone initially portrayed.''

The dollar climbed 0.8 percent to 103.66 yen at 11:01 a.m. in New York, from 102.87 on May 9. It was the biggest gain since May 2. The euro increased 0.9 percent to 160.68 yen, from 159.21 yen, the largest one-day advance since April 16. The dollar traded at $1.5496 per euro, compared with $1.5482.

Traders in the futures market have turned bullish on the dollar versus the euro for the first time since December 2005. The difference in the number of wagers by hedge funds and other large speculators on an advance in the greenback versus the euro, known as net longs, was 21,315 on April 29, figures from the Commodity Futures Trading Commission in Washington show. There were net-short positions in each of the previous 123 weeks. Net longs were trimmed to 12,512 on May 6.

Dollar's Rally

The U.S. currency has rallied 3.5 percent since touching the all-time low of $1.6019 per euro on April 22. The dollar gained momentum late last month after Fed policy makers said ``substantial'' rate cuts since September would help foster growth. The dollar got a further boost from a Labor Department report showing U.S. employers eliminated fewer jobs in April than economists forecast.

The pound increased from a two-week low against the euro and climbed versus the dollar after a surge in U.K. producer prices led traders to reduce bets that the Bank of England will cut its 5 percent target lending rate next month. Sterling rose 0.2 percent to 79.05 pence per euro and 0.3 percent to $1.9605.

South Africa's rand strengthened against all of the major currencies on speculation Johannesburg-based MTN Group Ltd., Africa's biggest mobile-phone operator, may soon be bought by a foreign company. The rand increased 1 percent to 7.6535 against the dollar and 1.2 percent to 11.83 per euro.

Weaker Yen

The yen dropped 2 percent versus the rand, 1.5 percent against the real and 1.3 percent against Norway's krone on speculation investors will increase carry trades, in which they get funds in a country with low borrowing costs and invest where returns are higher. Japan's 0.5 percent benchmark interest rate compares with 11.75 percent in Brazil, 11.5 percent in South Africa and 5.5 percent in Norway.

The U.S. currency's 14-day stochastic oscillator versus the yen was 8.1 on May 9 and 35.67 today, according to data compiled by Bloomberg. A level below 20 suggests the currency has fallen too fast. The chart measures the closing price of a currency relative to its highs and lows during a particular period to gauge whether it will rise or fall.

Futures on the Chicago Board of Trade show an 84 percent chance the Fed will hold its target lending rate at 2 percent at its next meeting on June 25, up from 82 percent odds on May 9. The balance of bets is for a cut of a quarter-percentage point. There's a 10 percent chance of an increase to 2.25 percent in September. The central bank has lowered the fed funds target 3.25 percentage points since September.

Fed Rate Outlook

``It's doubtful that the Fed can afford to cut more,'' said Benedikt Germanier, an analyst at UBS AG in Stamford, Connecticut, in an interview on Bloomberg Television. ``We are short on the euro-dollar. Our three-month forecast is $1.47.''

Chicago Fed President Charles Evans said in a speech today in Illinois that the central bank's current interest-rate stance is ``appropriate.''

The Dollar Index traded on ICE futures in New York, which tracks the dollar against currencies of six trading partners, rose to 73.214 today, from 73.050 on May 9. It dropped to a record of 70.698 on March 17. The dollar strengthened 0.6 percent to 1.0477 versus the Swiss franc.

The U.S. currency will increase to $1.50 per euro and trade at 102 yen by Dec. 31, according to the median forecast of 40 economists surveyed by Bloomberg News.

A Commerce Department report tomorrow will probably show U.S. retail sales fell 0.2 percent in April, following a 0.2 percent gain the prior month, according to the median forecast of 65 economists in a separate Bloomberg survey.

Dollar news

Dollar Rises on U.S. Productivity, Signs of European Slowdown

May 7 (Bloomberg) -- The dollar rose against the euro and the yen as U.S. productivity unexpectedly accelerated in March while Europe showed signs of an economic slowdown.

The currency appreciated for the first time in three days versus the euro as the yield advantage of German bunds over Treasuries decreased to the narrowest in more than two months. The pound fell to a 2 1/2-month low against the dollar after an industry report showed U.K. consumer confidence declined last month to the weakest in at least four years.

``Market sentiment is shifting to a more positive outlook for the dollar,'' said Camilla Sutton, co-head of currency strategy at Scotia Capital Inc. in Toronto. ``In the near term, there's a real reason the dollar should strengthen on the back of weaker European data.''

The dollar increased 1 percent to $1.5378 against the euro at 10:30 a.m. in New York, from $1.5532 yesterday. The U.S. currency rose 0.6 percent to 105.43 yen, from 104.77. The euro fell 0.4 percent to 162.15 yen, from 162.71.

The U.S. currency strengthened as the Labor Department reported that worker productivity unexpectedly accelerated in the first quarter, indicating the world's largest economy can expand with lower inflation.

Hoenig on Inflation

The dollar started its gain as Federal Reserve Bank of Kansas City President Thomas Hoenig said in a speech in Denver yesterday that ``serious'' U.S. inflation pressure may compel the central bank to increase interest rates.

``There is a significant risk that higher inflation will become embedded in the economy and require significant monetary policy tightening to reduce it,'' said Hoenig, a nonvoting Fed official this year.

The British pound dropped 0.8 percent versus the Canadian dollar and 0.7 percent against the Swedish krona after Nationwide Building Society said an index of sentiment in the U.K. declined to the lowest level since the survey began in May 2004. The pound fell as much as 1.1 percent to $1.9518, the weakest since Feb. 21. It decreased 0.2 percent to 78.87 pence against the euro.

The U.S. currency has rebounded 3.7 percent versus the euro since April 22, when it sank to a record low of $1.6019. The Fed said rate reductions to date were ``substantial'' after lowering its target lending rate last week by a quarter-percentage point to 2 percent, its seventh cut since September.

Dollar Outlook

The dollar will rise to $1.47 against the euro in three months because the Fed may not lower interest rates any further, according to UBS AG, the world's second biggest currency trader.

``Macro developments are supportive for the dollar continuing to strengthen,'' wrote Geoffrey Yu, Zurich-based strategist at UBS, in a research note today. ``Fed members stepped up hawkish commentary.''

The spread between two-year German notes and similar- maturity U.S. Treasuries reached 1.36 percentage points today, the narrowest since late February, making dollar-denominated assets more attractive to investors. The European Central Bank will leave its main refinancing rate at a six-year high of 4 percent tomorrow, according to all 53 economists surveyed by Bloomberg News.

Retail sales in the euro area declined 1.6 percent in March from a year earlier, the biggest drop since the data began in 1995, the European Union's statistics office said today. Sales fell 0.4 percent from the prior month.

German Manufacturing

The euro extended its drop versus the dollar after a government report showed German manufacturing orders dropped 5 percent in the year ended in March, compared with an 8.9 percent increase the prior month.

``The ECB has already shifted from a pretty hawkish stance to something close to neutral,'' said Meg Browne, a senior currency strategist at Brown Brothers Harriman & Co. in New York. ``We expect the European data to continue to deteriorate and the ECB to shift to a more dovish stance.''

The Dollar Index traded on ICE futures in New York, which tracks the currency against those of six trading partners, rose to 73.531, from 72.999 yesterday.

``We're dollar bulls,'' said Michael Metcalfe, the head of macro strategy in London at State Street Global Markets, a unit of the world's largest money manager for institutions. ``We've seen the top in euro-dollar.''

EURO NEWS

Euro Rises on Speculation ECB to Keep Rates at Six-Year High

May 5 (Bloomberg) -- The euro rose against the dollar for the first time in three days on speculation the European Central Bank will keep interest rates at a six-year high this week to control inflation.

The 15-nation currency, down 3.4 percent versus the dollar after reaching a record on April 22, appreciated as ECB President Jean-Claude Trichet said the risk of inflation is ``significant.'' The Australian and New Zealand dollars increased versus the U.S. dollar as commodity prices rose.

``Hawkish tones from the ECB will keep the euro'' in demand, said Dustin Reid, a senior currency strategist in Chicago at ABN Amro Bank NV. ``The market is very focused on any type of price data coming out of Europe.''

The euro rose 0.2 percent to $1.5456 at 10:29 a.m. in New York, from $1.5424 on May 2. It reached a record of $1.6019 on April 22. The euro rose 0.2 percent to 162.82 yen, from 162.53 yen. The dollar traded at 105.42 yen, compared with 105.40 yen.

The U.S. currency pared its drop against the euro as a private report showed service industries expanded in April. The Institute for Supply Management's index of non-manufacturing businesses, which make up almost 90 percent of the economy, increased to 52, from 49.6 the prior month.

The median forecast of 68 economists surveyed by Bloomberg News was for a reading of 49.1. Fifty is the dividing line between growth and contraction.

The Australian dollar advanced 0.7 percent to 94.15 U.S. cents and the New Zealand dollar increased 0.5 percent to 78.38 U.S. cents as the UBS Bloomberg Constant Maturity Commodity Index rose 2 percent on May 2, its first increase in four days.

Exports of raw materials contribute about 17 percent to Australia's economy, while more than a third of New Zealand's export income comes from meat, wool and dairy products.

Weaker Pound

The pound fell 0.6 percent to 78.66 pence against the euro, from 78.23 pence at the end of last week. The Bank of England will keep its benchmark rate at 5 percent on May 8, according to the median forecast of 61 economists surveyed by Bloomberg News. Markets were closed in London for May Day. Sterling dropped 0.2 percent to $1.9688, from $1.9717.

The ECB will leave its main refinancing rate at 4 percent when policy makers meet May 8, according to all 53 economists in a separate Bloomberg News survey. The Federal Reserve cut the target rate for overnight lending between banks by a quarter- percentage point to 2 percent on April 30, the seventh reduction since September.

``The recent rebound in the dollar is unlikely to be sustained given the fundamentals,'' said Michael Klawitter, a currency strategist in Frankfurt at Dresdner Kleinwort, the investment bank owned by Allianz SE, Europe's biggest insurer. ``As such, the euro should gain some ground, at least in the near term.''

Inflation Ceiling

Inflation will exceed the ECB's ceiling of 2 percent for a 10th year, according to the European Commission. Inflation expectations in the euro region, measured by the difference between the yields of nominal and inflation-protected bonds, increased as crude oil traded near a record and commodity prices spiraled higher.

The so-called breakeven rate on 10-year French inflation- linked notes rose to 2.33 percentage points today, from 2.08 percentage points a year ago, reflecting the rate of price growth investors expect over the next decade.

The dollar posted its second consecutive weekly advance against the euro last week on speculation the Fed will stop raising interest rates and the European economy will start to slow down.

Fed Rate

Interest-rate futures on the Chicago Board of Trade on May 2 showed an 86 percent chance U.S. policy makers will keep the target lending rate on hold when they next meet June 25, compared with 80 percent odds on May 1. The balance of bets is for a cut of a quarter-percentage point.

Traders are betting for the first time since December 2005 that the dollar will gain versus the European currency, according to figures from the Washington-based Commodity Futures Trading Commission.

The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain, known as net shorts, was 21,315 on April 29, compared with net longs of 18,907 a week earlier.

``We may have seen a short-term low in the euro on Friday,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. ``With the build-up of the short euro position, the risk is that the ECB stays quite hawkish.''

As Russia's Dmitry Medvedev prepares to be sworn in as president on May 7, Merrill Lynch & Co., Goldman Sachs Group Inc. and Deutsche Bank AG predict gains of as much as 4 percent in the ruble in the next six months against a currency basket made up of 0.55 dollars and 0.45 rubles.

The firms say pressure will mount on the Russian central bank to let the ruble appreciate to stem inflation even if it risks damping profits of oil and energy exporters, which according to Merrill Lynch fund more than half of the federal budget. The ruble rose 0.2 percent to 23.7503 against the dollar today, from 23.8012 on May 2.

Dollar Rises to Three-Week High on Bets Fed Will Signal Pause

Dollar Rises to Three-Week High on Bets Fed Will Signal Pause

April 29 (Bloomberg) -- The dollar strengthened to a three- week high against the euro on speculation the Federal Reserve will signal that it's done lowering interest rates.

The currency is headed for its first monthly advance against the euro this year, and also gained versus the Norwegian krone and pound today, as interest-rate futures show the Fed may lower borrowing costs tomorrow and then pause. The pound is poised for its biggest monthly decline against the dollar in 2008 as mortgage approvals in the U.K. sank.

``If the Fed is not at the end of the easing cycle, it's near the end,'' said Jeff Gladstein, global head of foreign- exchange trading at AIG Financial Products in Wilton, Connecticut. ``I don't think the dollar will strengthen aggressively by any stretch, but I do think it's trying to bottom.''

The dollar rose 0.4 percent to $1.5596 per euro at 10:26 a.m. in New York, from $1.5657 yesterday. It touched $1.5541, the strongest level since April 3. The dollar declined 0.8 percent to 103.33 yen, from 104.19 yesterday. The euro weakened 1.2 percent to 161.20 yen, from 163.11.

The U.S. currency has increased 4 percent against the yen and 1.4 percent versus the euro this month. The dollar fell to $1.6019 against the euro on April 22, the lowest level since the European currency debuted in 1999.

Futures on the Chicago Board of Trade show an 82 percent chance the Fed will cut the target rate for overnight lending by a quarter-percentage point to 2 percent and a 71 percent likelihood that the rate will be held at that level in June.

New Zealand Dollar

New Zealand's dollar weakened against all of the major currencies after a government report showed the annual trade deficit unexpectedly widened in March. The kiwi declined 1.5 percent to 77.42 U.S. cents after touching 77.27, the lowest level since Jan. 28.

Australia's dollar dropped 0.8 percent to 93.12 U.S. cents after the New York-based Conference Board's Australian index of leading economic indicators fell in February for a third month.

The pound weakened today after the Bank of England said banks granted 64,000 loans for house purchases in March, the lowest level in at least nine years, as the credit-market freeze prompted banks to reduce lending.

Sterling fell 0.9 percent to $1.9735 per dollar, from $1.9914, dropping 0.5 percent this month. The British currency decreased 0.4 percent to 78.92 pence per euro, from 78.62 pence. The dollar rose 0.8 percent to 5.1297 versus Norway's krone.

Bond Spread

The European currency's decline against the dollar accelerated as Deutsche Bank AG, the world's largest currency trader, reported its first quarterly loss in five years after writing down the value of loans for leveraged buyouts and asset- backed securities by 2.7 billion euros.

European retail sales dropped the most in more than four years in April as rising fuel and food prices squeezed shoppers' budgets, the Bloomberg purchasing managers index showed today. French consumer confidence dropped this month to a record low as accelerating inflation squeezed incomes.

``You have a re-emergence of the recoupling theme that the slowdown in the U.S. is spreading to other countries,'' said Michael Malpede, a senior currency analyst in Chicago at Man Global Research. ``The dollar, which has been on its knees, is in a short-term bottoming process.''

Investors should sell the euro against the dollar over the next several weeks because two-year German bunds have lost some of their yield advantage over comparable-maturity Treasuries, said Citigroup Inc., one of the 10 biggest currency traders. The yield difference, or spread, between the two securities has decreased to 1.46 percentage points, from 1.85 on March 31, the most since the euro was launched in 1999.

ECB Rate

European Central Bank policy makers have held the main refinancing rate at a six-year high of 4 percent since June to contain inflation. The U.S. central bank has cut its fed funds target 3 percentage points to 2.25 percent since September.

Gains in the dollar may stall at 106.60 yen, said Masashi Kurabe of Bank of Tokyo-Mitsubishi UFJ Ltd., citing charts that traders use to predict price movements.

The resistance level for the dollar is a 38.2 percent reversal of its decline to a low of 95.76 yen on March 17 from a high of 124.13 yen on June 22, based on the Fibonacci series of numbers. Resistance is a level where sellers may outnumber buyers.

``The dollar may reach that level in one month, but will face strong resistance around there,'' said Kurabe, head of the foreign-exchange sales and trading group in Hong Kong at Japan's second-largest bank by assets.

The U.S. currency remained higher against the euro as the Conference Board reported that confidence among U.S. consumers fell less than forecast this month. The New York-based research group's index of sentiment dropped to 62.3, the lowest level since March 2003, from a revised 65.9 in March. The median forecast of 67 economists surveyed by Bloomberg News was for the gauge to fall to 61 from a previously reported 64.5.