Euro Weakens as Reports Signal Region’s Debt Crisis Is Weighing on Growth

The euro fell to a six-week low against the dollar as reports added to signs that Europe’s economic growth is stagnating and Germany received insufficient bids at a debt auction.

The dollar rose against all of 16 its most-traded peers as a gauge of European services and manufacturing output shrank for a third month and a preliminary report showed China’s manufacturing by the most in almost three years. Sweden’s krona declined as central bank Deputy Governor Barbro Wickman-Parak said policy makers may cut interest rates if Europe’s debt crisis persists.

“The German bunds auction was pretty bad -- it clearly shows that euro-dollar was so far supported by the fact that bunds are a safe haven,” said Lutz Karpowitz, a senior currency strategist at Commerzbank AG in Frankfurt, in a telephone interview. “We expect a recession for the euro zone next year. Risk aversion is high.”

Europe’s shared currency dropped 0.8 percent to $1.3402 at 8:41 a.m. New York time, after sliding earlier to $1.3372, the least since Oct. 10. The euro fell 0.5 percent to 103.46 yen. The dollar was 0.3 percent higher at 77.20 yen.

Karpowitz said he expects the 17-nation currency to weaken to $1.32 by year-end.

Futures on the Standard and Poor’s 500 Index were 0.7 percent lower. Yields on 10-year Treasuries reached fell to as low as 1.88 percent, the least since Oct. 6, before increasing to 1.93 percent.