Euro Remains Lower Against Yen Before Europe, China PMIs - Businessweek

The euro remained lower following a two-day decline before a private report tomorrow that economists say will show services and manufacturing industries shrank in the currency bloc for an eighth month.

The 17-nation euro slid from a near four-month high before Spain auctions bonds tomorrow as the country considers seeking a bailout. The yen maintained a three-day drop before the Bank of Japan concludes a policy meeting today.

“The euro is likely to weaken in the long term,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “The economic outlook is bleak in Europe.”

The euro was at $1.3047 as of 8:32 a.m. in Tokyo after falling 0.6 in the past two days to $1.3048 in New York. It reached $1.3172 on Sept. 17, the strongest since May 4. The common currency was little changed at 102.79 yen. The yen traded at 78.79 per dollar following a three-day, 1.7 percent drop to 78.82 yesterday.

A euro-zone composite index for services and manufacturing industries was at 46.6 in September, little changed from 46.3 the prior month, according to the median estimate of economists surveyed by Bloomberg News. London-based Markit Economics will release the figure that’s based on a poll of purchasing managers in the industries tomorrow. A reading below 50 indicates contraction.

Spain, the fourth-largest economy in the currency bloc, will auction 3- and 10-year bonds tomorrow. The nation’s benchmark 10-year bond yield has fallen to 5.9 percent from the euro-era record of 7.75 percent on July 25 since the European Central Bank unveiled an unlimited bond-purchase program on Sept. 6 aimed at lowering government borrowing costs.

The country will consider seeking a bailout if the conditions imposed are acceptable, Deputy Prime Minister Soraya Saenz de Santamaria said yesterday, the strongest signal from the government that it’s positioning to reach for the financial lifeline.

The Bank of Japan (8301) will announce further monetary easing today, five of the 21 economists surveyed by Bloomberg forecast. The central bank increased the size of a fund to buy assets such as government debt by 5 trillion yen ($63 billion) to 45 trillion yen in July.

Concern that risks to the economy are growing may prompt the central bank to take action at its meeting today, rather than wait until next month, the Nikkei reported, without citing anyone.

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net