Aug. 21 (Bloomberg) -- The euro headed for a second weekly gain versus the dollar before a report forecast to show Europe’s manufacturing and service industries contracted this month at a slower pace, adding to signs the global recession is abating. The dollar was close to the lowest level this week against the Australian currency on speculation U.S. data today will show sales of existing homes increased in July for a fourth month, sapping demand for the greenback as a refuge. Canada’s dollar was near a one-week high versus the yen as Citigroup Inc. recommended buying the currency on signs of a “robust” economy, “resilient” banking sector and higher commodities. “We are firmly on a path to recovery,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “We will see risk appetite increase further. Growth commodity currencies such as the Aussie dollar and the Canadian dollar are primary beneficiaries and the euro will probably benefit.” The euro traded at $1.4250 at 9:34 a.m. in Tokyo from $1.4254 in New York yesterday and from $1.4203 on Aug. 14. The European currency fetched 133.99 yen from 134.26 yen. The dollar was at 94.02 yen from 94.19 yen. The Australian dollar bought 83.04 U.S. cents from 83.13 cents yesterday, when it touched 83.34 cents, the strongest level since Aug. 14. The British pound was at $1.6500 from $1.6507. The Canadian dollar fetched 86.35 yen from 86.66 yen, after earlier reaching 86.67, the highest level since Aug. 14. European Industries The euro was poised for a weekly advance versus 10 of 16 major counterparts as economists in a Bloomberg News survey said the composite index of manufacturing and service industries in Europe probably climbed to 48 this month from 47 in July. That would be the highest since August 2008. Markit Economics will release the gauge today. The index is based on a survey of purchasing managers by Markit and a reading below 50 indicates a contraction. The European Central Bank expects an economic recovery mid- 2010, ECB Executive Board member Lorenzo Bini Smaghi said in Cortina yesterday. The dollar may fall for a fourth day against Australia’s currency as a Bloomberg News survey of economists shows sales of U.S. existing homes gained 2.1 percent last month to an annual rate of 5 million, the highest since September 2008. The National Association of Realtors is set to report the data today in Washington. “An improvement in the U.S. housing market will support risk taking, as the current crisis stemmed from U.S. real estate issues,” said Yoh Nihei, trading group manager at Tokai Tokyo Securities Co. in Tokyo. “The dollar and yen continue to be sold. The euro will likely advance” toward $1.43 today, he said. Fed’s Bernanke The U.S. currency dropped yesterday against 12 of its 16 major counterparts after the Philadelphia Fed reported that manufacturing in the region unexpectedly expanded this month for the first time in almost a year, a sign the U.S. economy is recovering. The bank’s general economic index climbed to 4.2 from minus 7.5 in July. Positive readings signal expansion. Federal Reserve Chairman Ben S. Bernanke will speak at a symposium today in Jackson Hole, Wyoming, on the financial crisis over the past year. Canada’s dollar headed for a weekly gain versus the yen as Citigroup said it entered a long position in the currency known as the loonie. A long position is a bet an asset will rise. This trade is “to take advantage of relatively robust conditions in the Canadian economy, a resilient banking sector and broad demand support for commodities,” Citigroup analysts Todd Elmer, Michael Hart and Pierre-Alexandre Noual wrote in a note yesterday. “The yen remains posited to weaken in response to stabilizing risk appetite and domestic fundamental factors such as weak external performance.”

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