“The euro fell versus the dollar, extending its first monthly drop since July, as the Netherlandssaid it will breach European Union deficit limits, signaling nations are struggling to grow fast enough to cut their debts.
The 17-nation shared currency also slid against the yen after the Dutch government’s planning agency said today in a statement that the deficit will be 3.3 percent of gross domestic product in 2013 and 3.4 percent in 2014. The New Zealand dollar rose after an index showed business confidence increased. The Dollar Index was little changed before a report that analysts said will show the U.S. economy grew in the fourth quarter.
“The Dutch budget-deficit target forecasts look to be above the 3 percent EU target for this year and next and there are downgrade risks for the Netherlands around that,” saidMelinda Burgess, a currency strategist at Royal Bank of Scotland Group Plc in London. “This adds further weight to our view that we should see further downside for the euro from here. Fiscal and growth worries in the region could really come to the fore.”
The euro weakened 0.2 percent to $1.3114 at 6:57 a.m. New York time and is down 3.4 percent this month. It slid 0.3 percent to 120.84 yen, set for a 3 percent drop in February. The dollar was little changed at 92.15 yen.
Dutch GDP will shrink 0.5 percent in 2013, while growth may pick up later this year, resulting in an expansion of 1 percent in 2014, the Hague-based planning agency CPB said today in a statement. Unemployment is forecast to increase to 6.25 percent in 2013 from 5.3 percent in 2012.