By Yoshiaki Nohara and Ron Harui Nov. 13 (Bloomberg) -- The dollar weakened against higher- yielding currencies before a report today that may show Europe’s gross domestic product expanded for the first time in six quarters, damping demand for the greenback as a refuge. The yen rose against the dollar for the first time in three days amid speculation Japanese investors are repatriating earnings on overseas assets. The Australian dollar was poised for a second weekly advance after a report yesterday showed employers added jobs in October, boosting prospects the central bank will raise interest rates for a third-straight month. “If the GDP data are as good as expected or better, it will boost demand for the euro,” said Takako Masai, general manager of capital markets division at Shinsei Bank Ltd. in Tokyo. “Overall, the dollar remains under selling pressure. That’s not going to change soon.” The Norwegian krone rose to 5.6557 per dollar as of 5:48 a.m. in London from 5.6658 in New York yesterday. The Australian currency gained to 92.59 U.S. cents from 92.35 cents. The dollar dipped to $1.4866 per euro from $1.4850. The greenback has dropped against 13 of its 16 most-traded counterparts this week. The yen rose to 90.19 per dollar from 90.37, and traded at 134.08 per euro from 134.21. Japan’s currency has dropped 0.4 percent versus the dollar this week and declined 0.5 percent against the euro. Benchmark interest rates are 1.5 percent in Norway and 3.5 percent in Australia, making assets in those countries more attractive than in the U.S., where key rates are as low as zero. Europe’s Economy Economists in a Bloomberg News survey predict GDP in the 16-nation euro region expanded 0.5 percent in the third quarter from the second, when it contracted 0.2 percent. The European Union’s statistics office in Luxembourg will release the data today. The European Central Bank has kept its benchmark interest rate at 1 percent since May and is lending banks unlimited cash for up to a year to haul Europe out of the recession. President Jean-Claude Trichet signaled Nov. 5 the ECB’s December offer of 12-month loans to banks will be the last. The dollar pared losses after French Finance Minister Christine Lagarde said her government favors a “strong” U.S. dollar as an appreciating euro threatens to hurt European exports. “We definitely want” a strong dollar, Lagarde said in an interview today in Singapore, where she is attending meetings of the Asia Pacific Economic Cooperation group. Dollar’s Decline World Bank President Robert Zoellick said today the dollar’s recent decline is a response to the currency’s earlier gain and to market dynamics, giving the U.S. few near-term options for changing its course. The value of the U.S. currency depends on confidence in dollar-denominated assets and also to the movements of other currencies, Zoellick told Asia-Pacific business leaders in Singapore. The dollar grew in value during the height of the financial crisis because investors viewed it as a safe haven, Zoellick said. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against six currencies including the euro and yen, traded at 75.588 from 75.596. The yen was supported on speculation Japanese holders of Treasuries are bringing home returns on their U.S. securities. The U.S. will make $100.5 billion in redemption and coupon payments for Treasuries on Nov. 16, according to estimates by Stone & McCarthy Research Associates in Princeton, New Jersey. “It’s likely that Japanese investors will repatriate some of those payments,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s biggest currency broker. “It’s a yen-buying factor.” Australian Dollar Japan held $731 billion of U.S. government debt as of August, the second-largest owner after China, which had $797 billion, according to Treasury Department data. The Australian dollar headed for a second weekly gain versus the yen after the statistics bureau said in Sydney yesterday that the number of Australians employed rose 24,500 in October from September. The median estimate of economists surveyed by Bloomberg was for a decline of 10,000. The jobless rate rose to 5.8 percent from 5.7 percent. The Australian currency traded at 83.52 yen from 83.46 yen. It has gained 1.1 percent on the week. Losses in the U.S. dollar were limited as Asian stocks extended a slide in global equities. Asian Stocks “A decline in stocks will make it easier for the dollar to be bought back,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France’s third-largest bank. “Profit taking is occurring on dollar-shorts.” A short position is a bet that an asset will fall. The Nikkei 225 Stock Average fell 0.4 percent and the MSCI Asia Pacific Index of regional shares declined 0.2 percent. The Standard & Poor’s 500 Index yesterday dropped 1 percent. Futures traders reduced bets the dollar will decline against seven currencies including the euro, according to data from the Washington-based Commodity Futures Trading Commission. The difference in the number of wagers by hedge funds and other large speculators on a decline in the U.S. currency compared with those on a gain -- so-called net shorts -- was 175,462 on Nov. 3, compared with net shorts of 191,950 a week earlier. To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

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