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June 30 (Bloomberg) -- The dollar gained versus the euro for the first time in four days as a report showed U.S. consumer confidence unexpectedly dropped in June, increasing demand for the safety of the world’s main reserve currency.
The U.S. currency declined 5.6 percent against the euro in the three months ended today, its first quarterly drop since March 2008, pushing the greenback 0.4 percent lower in 2009. The yen was down 6.4 percent versus the euro this year, compared with a 2.6 percent decline in the first six months of 2008.
“The pound is having a correction after being hammered hard last year,” said Brian Kim, a currency strategist in Stamford, Connecticut, at UBS AG, the world’s second-largest currency trader. “There’s some valuation argument.”
Sterling rose as much as 0.8 percent to $1.6047, the highest level since Nov. 5, before trading at $1.6005 at 10:13 a.m. in New York, compared with $1.5926 yesterday. The pound appreciated 0.8 percent to 87.12 pence per euro, from 87.80 pence. The dollar traded at 94.91 yen, compared with 95.03. The euro decreased 0.4 percent to 132.36 yen from 132.90. The euro slid 0.2 percent to $1.3957 from $1.3984.
Brazil’s real strengthened beyond 2 per dollar for the first time in almost eight months, boosted by a rebound in demand for assets and commodities from Latin America’s largest economy. The benchmark interest rate in Brazil is 10.25 percent, compared with 0.1 percent in Japan, 1 percent in the 16-nation euro region and as low as zero in the U.S.
Sterling ‘Gaining’
“The view that sterling is gaining ground is becoming more prevalent,” said David Powell, a London-based currency strategist at the firm.
The pound climbed about 2.9 percent since it rose through its 200-day moving average versus the dollar on May 20, a sign to investors who use technical charts that it will extend its advance. Against the euro, it advanced 2.8 percent this month.
The pound may appreciate to 85 pence per euro by year-end, according to Bank of America-Merrill Lynch.
The dollar depreciated 5.2 percent versus the euro this month as signs of a global recovery reduced safe-haven demand for the greenback. It weakened beyond $1.40 last week for the first time since January on concern U.S. creditworthiness deteriorated as its budget deficit ballooned.
U.S. Housing
Sales of existing houses, which account for more than 90 percent of the U.S. market, gained last month to a 4.68 million annual rate, from a revised 4.55 million in the prior month, the National Association of Realtors reported today.
The dollar gained yesterday versus the euro after the Treasury’s record-tying $40 billion sale of two-year notes drew the most demand since November 2006 from a group of investors that includes foreign central banks. The U.S. will auction $35 billion in new five-year notes today, the second of three sales this week that will raise $101 billion.
