The euro gained for a second day against the dollar as demand grew at a Spanish sale of bonds to three years and the European Central Bank kept its main interest rate unchanged.
The currency of 16 nations gathered near a two-month low against the dollar on speculation the ECB will announce new measures to curb the fiscal crisis in the region. The dollar index fell for a second day as gains in Asian and European stock markets undermined demand for the greenback as a haven. The South African rand rose against the 16 most actively traded peers in manufacturing confidence rose in the fourth quarter.
"The fact that the Spanish debt auction was not as bad in combination with market pricing in the possibility that the ECB offers extra support of some kind is obviously positive for the euro and risky assets in general "said Kathleen Brooks, director of research at Gain Capital Group LLC in London. "The euro seems to be happy."
The euro traded at $ 1.3178 from 12:52 hours in London, from $ 1.3139 yesterday in New York. It traded at $ 1.2969 two days ago, at least since 15 September. The euro bought 111.07 yen, from 110.58. The dollar was trading at 84.27 yen from 84.19 yesterday.
Spain sold 2.5 billion euros of bonds maturing in October 2013 today at an average yield of 3.717 percent, the Bank of Spain data showed. That compares with a yield of 2.527 percent on sale last October 7. Investors bid for 2.27 times the securities offered, compared with a bid coverage ratio of 2.16 in October.
Shares Advance
The Stoxx Europe 600 index rose 0.6 percent, adding to a 2 percent yesterday, after declining in the last three days. The MSCI Asia Pacific Index rose 1.4 percent to 500 futures contracts on the Standard & Poor's index rose 0.5 percent. The dollar index, which tracks U.S. currency against six trading partners, fell 0.2 percent to 80.540.
The euro has fallen 3.4 percent in the last month, which track a basket of 10 currencies of the developed countries, amid concerns that the crisis in the region extend debt.
The ECB decision to keep the refinancing rate to 1 per cent was predicted by all 52 economists in a survey. ECB President Jean-Claude Trichet, will hold a press conference at 2:30 pm in Frankfurt.
"All the focus will be on the ECB, if you are more details about purchases of government bonds," said Niels Christensen, FX strategist at Nordea Bank AB in Copenhagen. "They will be careful not to make a mistake in the sense of letting the insurance market for its determination."
Home Sales Report
The U.S. currency fell further against the Canadian dollar and the rand before a report economists say will show the number of Americans who signed contracts to buy previously owned homes fell in October for the second straight month, fueling concern the economic recovery may stall.
The National Association of Realtors index "of pending home resales fell 1 percent after declining 1.8 percent the previous month, according to the median forecast of 40 economists surveyed by us. A report separately may show initial claims for unemployment benefits rose last week from a minimum of two years.
The greenback was 0.7 percent weaker against their Canadian counterparts at C $ 1.0103 and depreciated 0.6 percent to 6.9815 rand.
South Africa's manufacturing index of confidence rose 11 points to 41 in the fourth quarter as demand for exports, the Bureau of Economic Research, said. Production volumes increased in the transport, machinery, chemicals and basic metals, the Bureau, based at the University of Stellenbosch, near Cape Town, said in an emailed statement today.
Australia dollar fell against 14 of the 16 major currencies, weakening further against the Canadian dollar and the rand, after data showed retail sales unexpectedly fell and imports fell at least since February.
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